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Concord Medical Services Holdings Ltd

Concord Medical Services Holdings LtdCCM财报

NYSE · 医疗保健 · 服务-医生办公室及诊所

Concord Medical Services Holdings Ltd is an integrated healthcare provider specializing in oncology care, radiotherapy, and medical diagnostic imaging services focused on the Chinese market. It operates a network of cancer treatment centers, partners with public and private medical institutions to deliver care, and offers medical equipment management solutions.

What changed in Concord Medical Services Holdings Ltd's 20-F — 2022 vs 2023

Top changes in Concord Medical Services Holdings Ltd's 2023 20-F

546 paragraphs added · 460 removed · 390 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

110 edited+107 added−12 removed502 unchanged
Our operations could also be disrupted if our suppliers, customers or business partners were affected by such natural disasters or health epidemics. 26 Table of Contents The PRC government has significant influence over companies with China-based operations by enforcing existing rules and regulation, adopting new ones, or changing relevant industrial policies in a manner that may materially increase our compliance cost, abruptly change relevant industry landscape, or cause significant changes to, or otherwise intervene or influence, our operations in China at any time, which could result in material and adverse changes in our operations and cause the value of our securities to significantly decline or become worthless .
Our operations could also be disrupted if our suppliers, customers or business partners were affected by such natural disasters or health epidemics. 34 Table of Contents The PRC government has significant influence over companies with China-based operations by enforcing existing rules and regulation, adopting new ones, or changing relevant industrial policies in a manner that may materially increase our compliance cost, abruptly change relevant industry landscape, or cause significant changes to, or otherwise intervene or influence, our operations in China at any time, which could result in material and adverse changes in our operations and cause the value of our securities to significantly decline or become worthless .
Accordingly, any failure by us to maintain good working relationships with our hospital partners, or any dissatisfaction of our hospital partners with our services, could negatively affect our cooperative centers and our ability to collect revenue; reduce the likelihood that our agreements with hospital partners will be renewed; damage our reputation; and otherwise materially adversely affect our business, financial condition and results of operation. 10 Table of Contents We have derived and expect to continue to derive a significant portion of our revenues from our cancer hospitals and clinics in Shanghai and Guangzhou, and may be particularly sensitive to adverse developments in such regions.
Accordingly, any failure by us to maintain good working relationships with our hospital partners, or any dissatisfaction of our hospital partners with our services, could negatively affect our cooperative centers and our ability to collect revenue; reduce the likelihood that our agreements with hospital partners will be renewed; damage our reputation; and otherwise materially adversely affect our business, financial condition and results of operation. 16 Table of Contents We have derived and expect to continue to derive a significant portion of our revenues from our cancer hospitals and clinics in Shanghai and Guangzhou, and may be particularly sensitive to adverse developments in such regions.
The Measures for Cybersecurity Review 2022 provides that certain operators of critical information infrastructure purchasing network products and services or network platform operators carrying out data processing activities, which affect or may affect national security, must apply with the Cybersecurity Review Office for a cybersecurity review.
The Review Measures provides that certain operators of critical information infrastructure purchasing network products and services or network platform operators carrying out data processing activities, which affect or may affect national security, must apply with the Cybersecurity Review Office for a cybersecurity review.
If we fail to service such debt obligations or are unable to comply with any of these covenants, we could be in default under such debt obligations and our liquidity and financial condition could be materially adversely affected. 14 Table of Contents If we fail to maintain stable relationships with our strategic collaboration partners, our business, reputation, results of operations and financial condition may be adversely affected We have established strategic collaboration relationships with The University of Texas MD Anderson Cancer Center (“MD Anderson”) and Mayo Clinic, to leverage their advanced medical technology, sophisticated operational techniques, and abundant clinical experience in cancer diagnosis and treatment.
If we fail to service such debt obligations or are unable to comply with any of these covenants, we could be in default under such debt obligations and our liquidity and financial condition could be materially adversely affected. 22 Table of Contents If we fail to maintain stable relationships with our strategic collaboration partners, our business, reputation, results of operations and financial condition may be adversely affected We have established strategic collaboration relationships with The University of Texas MD Anderson Cancer Center (“MD Anderson”) and Mayo Clinic, to leverage their advanced medical technology, sophisticated operational techniques, and abundant clinical experience in cancer diagnosis and treatment.
Moreover, any negative news about the proceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of our ADSs may be adversely affected. 36 Table of Contents If our independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our consolidated financial statements, our consolidated financial statements could be determined not to be in compliance with the requirements of the Exchange Act.
Moreover, any negative news about the proceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of our ADSs may be adversely affected. 44 Table of Contents If our independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our consolidated financial statements, our consolidated financial statements could be determined not to be in compliance with the requirements of the Exchange Act.
Disruptions to, or instability of, our technology or external technology that allows our customers to use our online services and products could materially harm our business and reputation. 20 Table of Contents Although we have employed significant resources to develop security measures against breaches, our cybersecurity measures may not detect or prevent all attempts to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain.
Disruptions to, or instability of, our technology or external technology that allows our customers to use our online services and products could materially harm our business and reputation. 28 Table of Contents Although we have employed significant resources to develop security measures against breaches, our cybersecurity measures may not detect or prevent all attempts to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 28 Table of Contents The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 36 Table of Contents The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.
As a result, such technology may not gain acceptance by doctors and patients in China or may lose any acceptance previously gained if negative information concerning their effectiveness or safety emerges. 19 Table of Contents As our agreements with manufacturers do not directly address such contingencies, we cannot assure you that equipment manufacturers will allow us to return their equipment or will otherwise reimburse us for losses that we may suffer under all such circumstances.
As a result, such technology may not gain acceptance by doctors and patients in China or may lose any acceptance previously gained if negative information concerning their effectiveness or safety emerges. 27 Table of Contents As our agreements with manufacturers do not directly address such contingencies, we cannot assure you that equipment manufacturers will allow us to return their equipment or will otherwise reimburse us for losses that we may suffer under all such circumstances.
If the PCAOB is unable to inspect and investigate completely registered public accounting firms located in China in 2023 and beyond, or if we fail to, among others, meet the PCAOB’s requirements, including retaining a registered public accounting firm that the PCAOB determines it is able to inspect and investigate completely, and upon two consecutive years of non-inspection under the HFCAA, the ADSs will be delisted from the NYSE and our shares and ADSs will not be permitted for trading over the counter either.
If the PCAOB is unable to inspect and investigate completely registered public accounting firms located in China, or if we fail to, among others, meet the PCAOB’s requirements, including retaining a registered public accounting firm that the PCAOB determines it is able to inspect and investigate completely, and upon two consecutive years of non-inspection under the HFCAA, the ADSs will be delisted from the NYSE and our shares and ADSs will not be permitted for trading over the counter either.
Our financial statements contained in the annual report on Form 20-F for the fiscal year ended December 31, 2022 have been audited by an independent registered public accounting firm that is located in China and is among the public accounting firms registered with the PCAOB headquartered in the PRC that are subject to PCAOB’s determination issued on December 16, 2021 of having been unable to be inspected or investigated completely by the PCAOB.
Our financial statements contained in the annual report on Form 20-F for the fiscal year ended December 31, 2023 have been audited by an independent registered public accounting firm that is located in China and is among the public accounting firms registered with the PCAOB headquartered in the PRC that are subject to PCAOB’s determination issued on December 16, 2021 of having been unable to be inspected or investigated completely by the PCAOB.
In particular, the global financial crisis, the ensuing economic recessions and deterioration in the credit market in many countries have contributed and may continue to contribute to extreme volatility in the global stock markets. 37 Table of Contents Moreover, there have been recent instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent initial public offerings, particularly among companies with relatively smaller public floats.
In particular, the global financial crisis, the ensuing economic recessions and deterioration in the credit market in many countries have contributed and may continue to contribute to extreme volatility in the global stock markets. 45 Table of Contents Moreover, there have been recent instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent initial public offerings, particularly among companies with relatively smaller public floats.
Moreover, our cloud system solutions and internet hospital have access to, generate and process a large amount of personal, transaction, demographic and behavioral data. 17 Table of Contents We have taken measures to maintain the confidentiality of our patients’ personal and medical information, including encrypting such information in our information technology system so that it cannot be viewed without proper authorization and setting internal rules requiring our employees to maintain the confidentiality of our patients’ personal and medical information.
Moreover, our cloud system solutions and internet hospital have access to, generate and process a large amount of personal, transaction, demographic and behavioral data. 25 Table of Contents We have taken measures to maintain the confidentiality of our patients’ personal and medical information, including encrypting such information in our information technology system so that it cannot be viewed without proper authorization and setting internal rules requiring our employees to maintain the confidentiality of our patients’ personal and medical information.
In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. 23 Table of Contents As a result of all of the above, public shareholders may have more difficulty in protecting their interests through actions against us, our management, members of the board of directors or controlling shareholders than they would as shareholders of a company incorporated in the U.S.
In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. 31 Table of Contents As a result of all of the above, public shareholders may have more difficulty in protecting their interests through actions against us, our management, members of the board of directors or controlling shareholders than they would as shareholders of a company incorporated in the U.S.
However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. 27 Table of Contents These uncertainties may impede our ability to enforce the contracts we have entered into with our business partners, customers and suppliers.
However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. 35 Table of Contents These uncertainties may impede our ability to enforce the contracts we have entered into with our business partners, customers and suppliers.
Any adverse change in the economic conditions or government policies in China could materially adversely affect overall economic growth and the level of healthcare investments and expenditures in China, which in turn could lead to a reduction in demand for our products and materially adversely affect our businesses. 25 Table of Contents We face risks related to natural disasters and health epidemics in China, which could materially adversely affect our business and results of operations.
Any adverse change in the economic conditions or government policies in China could materially adversely affect overall economic growth and the level of healthcare investments and expenditures in China, which in turn could lead to a reduction in demand for our products and materially adversely affect our businesses. 33 Table of Contents We face risks related to natural disasters and health epidemics in China, which could materially adversely affect our business and results of operations.
This will have an impact on our effective tax rate, materially adversely affect our net income and results of operations, and may require us to withhold tax on our non-PRC shareholders. 35 Table of Contents Dividends payable by us to our foreign investors and gains on the sale of our ADSs or ordinary shares may become subject to taxes under PRC tax laws.
This will have an impact on our effective tax rate, materially adversely affect our net income and results of operations, and may require us to withhold tax on our non-PRC shareholders. 43 Table of Contents Dividends payable by us to our foreign investors and gains on the sale of our ADSs or ordinary shares may become subject to taxes under PRC tax laws.
It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar. 33 Table of Contents There remains significant international pressure on the PRC government to liberalize its currency policy, which could result in a further and more significant fluctuation in the value of the Renminbi against the U.S. dollar.
It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar. 41 Table of Contents There remains significant international pressure on the PRC government to liberalize its currency policy, which could result in a further and more significant fluctuation in the value of the Renminbi against the U.S. dollar.
The PRC State Council has reduced such rate to 10%, in the absence of any applicable tax treaties that may reduce such rate, through the implementation regulations. 34 Table of Contents We are a Cayman Islands holding company and substantially all of our income may be derived from dividends we receive from our operating subsidiaries located in the PRC.
The PRC State Council has reduced such rate to 10%, in the absence of any applicable tax treaties that may reduce such rate, through the implementation regulations. 42 Table of Contents We are a Cayman Islands holding company and substantially all of our income may be derived from dividends we receive from our operating subsidiaries located in the PRC.
We may also need to obtain certain types of insurance that we do not currently carry for the coverage of additional liability exposure associated with operating these hospitals and clinics. 15 Table of Contents However, such insurance coverage may not be available at a reasonable price and we may not be able to maintain adequate levels of liability insurance coverage, if at all.
We may also need to obtain certain types of insurance that we do not currently carry for the coverage of additional liability exposure associated with operating these hospitals and clinics. 23 Table of Contents However, such insurance coverage may not be available at a reasonable price and we may not be able to maintain adequate levels of liability insurance coverage, if at all.
Our cancer hospitals and the cooperative centers may also be prohibited from using such equipment, which could damage our reputation and materially adversely affect our business prospects, financial condition and results of operations. 18 Table of Contents In addition, any such proceeding may be costly to defend and divert our management’s attention and other resources away from our business.
Our cancer hospitals and the cooperative centers may also be prohibited from using such equipment, which could damage our reputation and materially adversely affect our business prospects, financial condition and results of operations. 26 Table of Contents In addition, any such proceeding may be costly to defend and divert our management’s attention and other resources away from our business.
We believe we were not a passive foreign investment company (a “PFIC”) for our taxable year ended on December 31, 2022, although there can be no assurance in this regard. The determination of whether or not we are a PFIC is made on an annual basis and depends on the composition of our income and assets.
We believe we were not a passive foreign investment company (a “PFIC”) for our taxable year ended on December 31, 2023, although there can be no assurance in this regard. The determination of whether or not we are a PFIC is made on an annual basis and depends on the composition of our income and assets.
If our board of directors issues preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be adversely affected. 22 Table of Contents If we fail to maintain an effective system of internal control over financial reporting, we may lose investor confidence in the reliability of our financial statements.
If our board of directors issues preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be adversely affected. 30 Table of Contents If we fail to maintain an effective system of internal control over financial reporting, we may lose investor confidence in the reliability of our financial statements.
Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings. 39 Table of Contents The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses.
Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings. 47 Table of Contents The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses.
In addition, the operations of our cancer hospitals and cooperative centers may be vulnerable to natural disasters that disrupt transportation since many patients travel long distances to reach such hospitals and centers. We do not have insurance coverage for some of our medical equipment and do not have any business interruption insurance.
In addition, the operations of our cancer hospitals and cooperative centers may be vulnerable to natural disasters that disrupt transportation since many patients travel long distances to reach such hospitals and centers. We do not have insurance coverage for some of our medical equipment and do not have business interruption insurance for some of our medical institutions.
See “—Risks Related to Our Company—We plan to establish and operate proton centers, and cancer hospitals and clinics that will be majority-owned by us and are subject to significant risks.” Government authorities may interpret regulations to find that our lease and management agreements are not in compliance with relevant regulations.
See “—We plan to establish and operate proton centers, and cancer hospitals and clinics that will be majority-owned by us and are subject to significant risks.” Government authorities may interpret regulations to find that our lease and management agreements are not in compliance with relevant regulations.
Although the current number of procurement licenses available did not significantly impact our expansion plans in 2022, the limitation on the number of procurement licenses available and any adverse changes to such procurement licenses available in the future, or any failure of our hospital partners and our cancer hospitals and clinics to obtain such licenses, may affect our expansion plan going forward.
Although the current number of procurement licenses available did not significantly impact our expansion plans in 2023, the limitation on the number of procurement licenses available and any adverse changes to such procurement licenses available in the future, or any failure of our hospital partners and our cancer hospitals and clinics to obtain such licenses, may affect our expansion plan going forward.
Such extended downtime could result in lost revenues for us and our partner hospitals, dissatisfaction of our patients and our partner hospitals and damage to the reputation of our own cancer hospitals, the cooperative centers in our network, our partner hospitals and our company. 16 Table of Contents We rely on a limited number of equipment manufacturers.
Such extended downtime could result in lost revenues for us and our partner hospitals, dissatisfaction of our patients and our partner hospitals and damage to the reputation of our own cancer hospitals, the cooperative centers in our network, our partner hospitals and our company. 24 Table of Contents We rely on a limited number of equipment manufacturers.
As such, we may also face the risks of loss of patient sources. 21 Table of Contents If we become subject to litigation, legal or contractual disputes, governmental investigations or administrative proceedings, our management’s attention may be diverted and we may incur substantial costs and liabilities.
As such, we may also face the risks of loss of patient sources. 29 Table of Contents If we become subject to litigation, legal or contractual disputes, governmental investigations or administrative proceedings, our management’s attention may be diverted and we may incur substantial costs and liabilities.
Taxation—United States Federal Income Taxation—Passive Foreign Investment Company.” 24 Table of Contents If a United States person is treated as owning at least 10% of our shares, such holder may be subject to adverse U.S. federal income tax consequences.
Taxation—United States Federal Income Taxation—Passive Foreign Investment Company.” 32 Table of Contents If a United States person is treated as owning at least 10% of our shares, such holder may be subject to adverse U.S. federal income tax consequences.
In addition, in your capacity as an ADS holder, you will not be able to call a shareholder meeting. 38 Table of Contents Holders of our Class B ordinary shares will control the outcome of shareholder actions in our company. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares.
In addition, in your capacity as an ADS holder, you will not be able to call a shareholder meeting. 46 Table of Contents Holders of our Class B ordinary shares will control the outcome of shareholder actions in our company. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares.
Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our listed securities. The M&A Rule establishes more complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our listed securities. 37 Table of Contents The M&A Rule establishes more complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
As a result, our business, results of operations and financial condition could be materially and adversely affected. 32 Table of Contents Governmental control of currency conversion may limit our ability to use our revenues effectively and the ability of our PRC subsidiaries to obtain financing.
As a result, our business, results of operations and financial condition could be materially and adversely affected. 40 Table of Contents Governmental control of currency conversion may limit our ability to use our revenues effectively and the ability of our PRC subsidiaries to obtain financing.
Such regulatory requirements on data privacy are constantly evolving and can be subject to varying interpretations, or significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. 30 Table of Contents For instance, on June 10, 2021, the Standing Committee of the National People’s Congress (“SCNPC”) promulgated the PRC Data Security Law, which took effect on September 1, 2021.
Such regulatory requirements on data privacy are constantly evolving and can be subject to varying interpretations, or significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. For instance, on June 10, 2021, the Standing Committee of the National People’s Congress (“SCNPC”) promulgated the PRC Data Security Law, which took effect on September 1, 2021.
Escalation of prevailing interest rates could substantially increase our finance costs, which could materially and adversely affect our business, financial condition and results of operation. We are subject to certain restrictive covenants under the terms of our bank borrowings, which are commonly found in loan arrangements with financial institutions in China, and may restrict or otherwise adversely affect our operations.
Escalation of prevailing interest rates could substantially increase our finance costs, which could materially and adversely affect our business, financial condition and results of operation. 14 Table of Contents We are subject to certain restrictive covenants under the terms of our bank borrowings, which are commonly found in loan arrangements with financial institutions in China, and may restrict or otherwise adversely affect our operations.
Furthermore, the online healthcare service market is immature and volatile, and if it does not develop, if it develops more slowly than we expect, or if our services do not drive user engagement, the growth of our business will be harmed. In addition, the performance of our internet hospital will rely heavily on our marketing and business developing strategy.
Furthermore, the online healthcare service market is immature and volatile, and if it does not develop, if it develops more slowly than we expect, or if our services do not drive user engagement, the growth of our business will be harmed. 10 Table of Contents In addition, the performance of our internet hospital will rely heavily on our marketing and business developing strategy.
In addition, the completion time for exterior wall construction for Shanghai Hospital was expected to be postponed from June 30, 2021 to January 2023 due to the lack of labor in Shanghai during the COVID-19 pandemic.
In addition, the completion time for exterior wall construction for Shanghai Hospital was expected to be postponed from June 30, 2021 to January 2023 due to the lack of labor in Shanghai during the COVID-19 resurgence.
These short attacks have, in the past, led to selling of shares in the market. 40 Table of Contents Public companies listed in the United States that have a substantial majority of their operations in China have been the subject of short selling.
These short attacks have, in the past, led to selling of shares in the market. 48 Table of Contents Public companies listed in the United States that have a substantial majority of their operations in China have been the subject of short selling.
If we fail to improve our existing services or introduce new ones in a timely or cost-effective manner, our ability to attract and retain clients may be impaired, and our results of operations and prospects may be adversely affected. 4 Table of Contents We plan to establish and operate our internet hospital which could be subject to significant risks.
If we fail to improve our existing services or introduce new ones in a timely or cost-effective manner, our ability to attract and retain clients may be impaired, and our results of operations and prospects may be adversely affected. We plan to establish and operate our internet hospital which could be subject to significant risks.
The material weakness as of December 31, 2022 was related to the lack of accounting staff and resources with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements. See “Item 15.
The material weakness as of December 31, 2023 was related to the lack of accounting staff and resources with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements. See “Item 15.
The catalogue divides large medical equipment into Class A and Class B. For medical equipment classified as Class A large medical equipment, which includes proton therapy systems, the NHC conducts procurement planning and approval. In addition, the NHC issues large medical equipment procurement licenses.
The Catalog divides large medical equipment into Class A and Class B. For medical equipment classified as Class A large medical equipment, which includes proton therapy systems, the NHC conducts procurement planning and approval. In addition, the NHC issues large medical equipment procurement licenses.
For public servants and others covered by 1989 Administrative Measure on Public Health Service and the 1997 Circular of Reimbursement Coverage of Large Medical Equipment of Public Health Service, the government either fully or partially reimburses medical expenses for certain approved cancer diagnosis and radiotherapy treatment services, including treatments utilizing linear accelerators and diagnostic imaging services utilizing CT and magnetic resonance imaging (“MRI”) scanners.
For public servants and others covered the 1989 Administrative Measure on State Provision of Healthcare and the 1997 Circular of Reimbursement Coverage of Large Medical Equipment of Public Health Service, the government either fully or partially reimburses medical expenses for certain approved cancer diagnosis and radiotherapy treatment services, including treatments utilizing linear accelerators and diagnostic imaging services utilizing CT and magnetic resonance imaging (“MRI”) scanners.
Our management has concluded that we had not maintained effective internal control over financial reporting and disclosure controls and procedures as of December 31, 2022.
Our management has concluded that we had not maintained effective internal control over financial reporting and disclosure controls and procedures as of December 31, 2023.
Finally, the development of new cooperative centers generally involves a ramp-up period during which the operating efficiency of such cooperative centers may be lower than our established cooperative centers, which may negatively affect our profitability. We conduct our business in a heavily regulated industry.
Finally, the development of new cooperative centers generally involves a ramp-up period during which the operating efficiency of such cooperative centers may be lower than our established cooperative centers, which may negatively affect our profitability. 12 Table of Contents We conduct our business in a heavily regulated industry.
In 2020, 2021 and 2022, accounts receivable was RMB1.7 million, RMB2.0 million and nil were written off as uncollectible, respectively. Any failure by our hospital partners to pay us our contracted percentage, or any disputes over, or significant delays in, receiving such payments from our hospital partners could negatively impact our financial condition.
In 2021, 2022 and 2023, accounts receivable was RMB2.0 million, nil and nil were written off as uncollectible, respectively. Any failure by our hospital partners to pay us our contracted percentage, or any disputes over, or significant delays in, receiving such payments from our hospital partners could negatively impact our financial condition.
We have applied for and obtained the registration of our trademark “Medstar” and a total of 92 other trademarks, including “Concord Medical,” in China to protect our corporate name as of the date of this annual report. We also owned the rights to 90 domain names that we use in connection with our business as of the same date.
We have applied for and obtained the registration of our trademark “Medstar” and a total of 168 other trademarks, including “Concord Medical,” in China to protect our corporate name as of the date of this annual report. We also owned the rights to 98 domain names that we use in connection with our business as of the same date.
Certain of the medical services and products provided in our cancer hospitals and cooperative centers are effectively subject to regulatory price controls, which may reduce our profitability. PRC laws and regulations impose price controls and price ceilings on various service and products provided by medical institutions.
Certain of the medical services and products provided in our cancer hospitals and cooperative centers are effectively subject to regulatory price controls due to our voluntary price-matching policies, which may reduce our profitability. PRC laws and regulations impose price controls and price ceilings on various service and products provided by medical institutions.
We will focus on the following activities: (1) we plan to seek additional equity and debt financing from new investors into our hospital and network business operation and extend the terms of current loans; (2) we plan to improve the profitability of network business and hospital business through upgrading cloud system solutions, developing internet hospital business, accelerating the transformation of scientific research and training achievements into clinical application and so on; and (3) we are currently focusing on improving operational efficiency and reducing cost to standardize operations, enhance internal controls, and create synergy of our resources.
We will focus on the following activities: (1) we plan to seek additional equity and debt financing from new investors into the hospital and network business operation and extend the terms of current loans; (2) we plan to improve the profitability of network business and hospital business through, among others, upgrading cloud system solutions, accelerating the transformation of scientific research and training achievements into clinical application; (3) we are currently focusing on improving operation efficiency and cost reduction to standardize operations, enhance internal controls, and create synergy of our resources.
The allocation will depend on the actual situation of regional function orientation, radiation capacity of medical services and the service level of diagnosis and treatment of medical institutions. In addition, the 2018-2020 Plan also stipulates the provincial the procurement planning and quotas for Class B large medical equipment procurement licenses.
The allocation will depend on the actual situation of regional function orientation, radiation capacity of medical services and the service level of diagnosis and treatment of medical institutions. In addition, the 14th Five-Year Plan also stipulates the provincial the procurement planning and quotas for Class B large medical equipment procurement licenses.
In 2020, 2021 and 2022, net revenues derived from settlement through public medical insurance programs accounted for approximately 15%, 10% and 16% of our total net revenues for the same periods, respectively.
In 2021, 2022 and 2023, net revenues derived from settlement through public medical insurance programs accounted for approximately 10%, 16% and 24% of our total net revenues for the same periods, respectively.
In addition, the top five of our hospital partners in terms of revenue contribution, accounted for 39.8% of our total network accounts receivable as of December 31, 2022. Any significant delay in the payment of such accounts receivable could materially impact our financial condition and results of operations.
In addition, the top five of our hospital partners in terms of revenue contribution, accounted for 43.0% of our total network accounts receivable as of December 31, 2023. Any significant delay in the payment of such accounts receivable could materially impact our financial condition and results of operations.
In 2020, 2021 and 2022, net revenues derived from our cancer hospitals and clinics located in Shanghai and Guangzhou accounted for 32.9%, 29.0% and 42.4%, respectively, of our total net revenues in the same periods.
In 2021, 2022 and 2023, net revenues derived from our cancer hospitals and clinics located in Shanghai and Guangzhou accounted for 29.0%, 42.4% and 57.4%, respectively, of our total net revenues in the same periods.
See “—Healthcare administrative authorities in China currently set procurement quotas for certain types of medical equipment.” 6 Table of Contents Due to the limited supply of suitable top-tier hospitals and increasing competition, we may not be able to enter into agreements with new hospital partners or renew agreements with existing hospital partners on terms as favorable as those that we have been able to obtain in the past, or at all.
See “—Healthcare administrative authorities in China currently set procurement quotas and other regulatory requirements for certain types of medical equipment, including proton therapy treatment systems.” Due to the limited supply of suitable top-tier hospitals and increasing competition, we may not be able to enter into agreements with new hospital partners or renew agreements with existing hospital partners on terms as favorable as those that we have been able to obtain in the past, or at all.
Furthermore, future acquisitions or joint ventures could result in potentially dilutive issuances of equity or equity-linked securities or the incurrence of debt, contingent liabilities or other expenses, any of which could materially adversely affect our business, financial condition and results of operations. Healthcare administrative authorities in China currently set procurement quotas for certain types of medical equipment.
Furthermore, future acquisitions or joint ventures could result in potentially dilutive issuances of equity or equity-linked securities or the incurrence of debt, contingent liabilities or other expenses, any of which could materially adversely affect our business, financial condition and results of operations. 19 Table of Contents Healthcare administrative authorities in China currently set procurement quotas and other regulatory requirements for certain types of medical equipment, including proton therapy treatment systems.
This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not be able to refinance any of our indebtedness on commercially reasonable terms, or at all.
Our ability to satisfy our repayment obligations largely depends on our operating performance. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not be able to refinance any of our indebtedness on commercially reasonable terms, or at all.
Complying with the requirements of the M&A Rule to complete such transactions could be time-consuming. Any required approval processes, including obtaining approval from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
We may grow our business in part by acquiring complementary businesses. Complying with the requirements of the M&A Rule to complete such transactions could be time-consuming. Any required approval processes, including obtaining approval from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
Cooperative centers located in Beijing Municipality, Hubei Province and Henan Province accounted for 35.9%, 18.1% and 15.3%, respectively, of our total net revenues in 2022. 9 Table of Contents Such revenue concentration may continue in the future.
Cooperative centers located in Beijing Municipality, Hubei Province and Henan Province accounted for 35.9%, 18.1% and 15.3%, respectively, of our total net revenues in 2022. Cooperative centers located in Henan Province, Beijing Municipality and Hubei Province accounted for 20.3%, 19.9% and 13.6%, respectively, of our total net revenues in 2023. Such revenue concentration may continue in the future.
These risks are discussed more fully below and include, but are not limited to, risks related to: Risks related to our business and industry ● our ability to establish and operate proton centers, and cancer hospitals and clinics ; ● our ability to introduce new services or upgrade existing services in a timely and cost-effective manner; ● our ability to establish and operate our internet hospital; ● our ability to carry out our large-scale hospital construction projects, which requires substantial capital expenditures and other resources; ● our ability to manage the development and ramp-up schedule of new cancer hospitals and clinics; ● our ability to identify and seize growth opportunities in fast-changing markets; ● our ability to open new cooperative centers or renew agreements for existing cooperative centers; ● our ability to comply with PRC laws and regulations in the heavily regulated industry; ● our ability to generate profits, positive cash flows from operating activities and net current assets in the future; and ● our ability to satisfy our obligations under bank and other borrowings.
These risks are discussed more fully below and include, but are not limited to, risks related to: Risks related to our business and industry ● our ability to establish and operate proton centers, and cancer hospitals and clinics ; ● our ability to introduce new services or upgrade existing services in a timely and cost-effective manner; ● our ability to establish and operate our internet hospital; ● our ability to carry out our large-scale hospital construction projects, which requires substantial capital expenditures and other resources; ● our ability to manage the development and ramp-up schedule of new cancer hospitals and clinics; 8 Table of Contents ● our ability to identify and seize growth opportunities in fast-changing markets; ● our ability to open new cooperative centers or renew agreements for existing cooperative centers; ● our ability to comply with PRC laws and regulations in the heavily regulated industry; ● our ability to generate profits, positive cash flows from operating activities and net current assets in the future; ● our ability to satisfy our obligations under bank and other borrowings; and ● difficulty to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors.
In addition, such waiver, even if granted, may lead to increased costs, increased interest rates, additional restrictive covenants and other protections available to the counterparties under these loans, including the granting of additional security interests in collaterals or pledged assets, which could adversely affect our business, results of operations, financial condition, and our ability to acquire additional capital resources. 8 Table of Contents Our ability to satisfy our repayment obligations largely depends on our operating performance.
In addition, such waiver, even if granted, may lead to increased costs, increased interest rates, additional restrictive covenants and other protections available to the counterparties under these loans, including the granting of additional security interests in collaterals or pledged assets, which could adversely affect our business, results of operations, financial condition, and our ability to acquire additional capital resources.
Any future natural disasters or health epidemics in the PRC could severely disrupt our daily operations, and may even require a temporary closure of our cancer hospitals and cooperative centers. Such closures may disrupt our operations and adversely affect our results of operations.
Any prolonged deviations from normal daily operations could negatively impact our business. Moreover, any future natural disasters or health epidemics in the PRC could severely disrupt our daily operations, and may even require a temporary closure of our cancer hospitals and cooperative centers. Such closures may disrupt our operations and adversely affect our results of operations.
As such, substantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation. 31 Table of Contents On December 28, 2021, the CAC and 12 other government authorities published an amendment of the Measures for Cybersecurity Review 2020 (the “Measures for Cybersecurity Review 2022”), which took effect on February 15, 2022.
As such, substantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation. 39 Table of Contents On December 28, 2021, the CAC and 12 other government authorities published the Review Measures, which took effect on February 15, 2022.
Our total outstanding accounts receivable from our hospital partners were RMB120.6 million and RMB111.8 million (US$16.2 million) as of December 31, 2021 and 2022, respectively. As of December 31, 2022, approximately 4.0% of the accounts receivable for our network business reported on our consolidated balance sheets as of December 31, 2021 were still outstanding.
Our total outstanding accounts receivable from our hospital partners were RMB111.8 million and RMB59.0 million (US$8.3 million) as of December 31, 2022 and 2023, respectively. As of December 31, 2023, approximately 22.8% of the accounts receivable for our network business reported on our consolidated balance sheets as of December 31, 2022 were still outstanding.
As of December 31, 2021 and 2022, the short-term bank and other borrowing bore a weighted average interest of 5.86% and 6.60% per annum, respectively, and the long-term bank and other borrowings bore a weighted average interest of 6.31% and 6.48% per annum, respectively.
As of December 31, 2022 and 2023, the short-term bank and other borrowing bore a weighted average interest of 6.60% and 8.19% per annum, respectively, and the long-term bank and other borrowings bore a weighted average interest of 6.48% and 7.42% per annum, respectively.
To attract patients, we need to recruit medical professionals and other personnel and train them properly, provide services and treatment environment superior to local hospitals and install high-end equipment, including CyberKnife systems, positron emission tomography-magnetic resonance (“PET-MR”) scanners and proton therapy systems.
All these cities are considered top-tier cities in China, with large and nationally-renowned government hospitals. To attract patients, we need to recruit medical professionals and other personnel and train them properly, provide services and treatment environment superior to local hospitals and install high-end equipment, including CyberKnife systems, positron emission tomography-magnetic resonance (“PET-MR”) scanners and proton therapy systems.
According to Notice on Adjusting the Configuration Plan of Large medical Equipment for 2018-2020 (the “2018-2020 Plan”) issued by NHC on July 17, 2020, national master plan configures a maximum of 16 newly added proton therapy treatment systems between 2018 and 2020 and the total number of PET-CT large medical equipment procurement licenses issued in China cannot exceed 884.
According to Notice on Adjusting the Configuration Plan of Large medical Equipment for 14th Five-Year Plan (the “14th Five-Year Plan”) issued by NHC on July 21, 2023, national master plan configures a maximum of 41 newly added proton therapy treatment systems between 2021 and 2025 and the total number of PET-CT large medical equipment procurement licenses issued in China cannot exceed 860.
As we had been listed on NYSE prior to March 31, 2023, we are not required to make immediate filing with the CSRC in connection with our listing. However, we could be subject to the filing requirements with the CSRC if we conduct subsequent offerings.
As we had been listed on NYSE prior to March 31, 2023, as advised by our PRC counsel, Jingtian & Gongcheng Attorneys At Law, we are not required to make any filing with the CSRC in connection with our listing. However, we will be subject to the filing requirements with the CSRC if we conduct subsequent offerings.
Furthermore, we may have to change our business model which may not be successful. If any of the above were to occur, our business, financial condition and results of operation could be materially and adversely affected.
Furthermore, we may have to change our business model which may not be successful. If any of the above were to occur, our business, financial condition and results of operation could be materially and adversely affected. We may have conflicts of interest with our subsidiary Concord Healthcare which is a stand-alone public company.
We expect to continue to receive a significant portion of our total medical bill payments under public medical insurance programs in China. 11 Table of Contents We cannot assure you that our cancer hospitals and clinics will be able to maintain their status as medical insurance designated medical institutions, the loss of which will not only harm our reputation but may also result in reduced patient visits.
We cannot assure you that our cancer hospitals and clinics will be able to maintain their status as medical insurance designated medical institutions, the loss of which will not only harm our reputation but may also result in reduced patient visits.
The market value of our assets may be determined in large part by the market price of our ADSs and ordinary shares, which is likely to fluctuate. In addition, the composition of our income and assets will be affected by how, and how quickly, we spend our cash.
The market value of our assets may be determined in large part by the market price of our ADSs and ordinary shares, which is likely to fluctuate.
If we have significant net current liabilities for an extended period of time, our working capital for purposes of our operations may be subject to constraints, which may materially adversely affect our business, financial condition and results of operations.
If we have significant net current liabilities for an extended period of time, our working capital for purposes of our operations may be subject to constraints, which may materially adversely affect our business, financial condition and results of operations. 13 Table of Contents Our indebtedness and large repayment sums may materially and adversely affect our liquidity and ability to respond to adverse economic and industry conditions.
Pursuant to the Administrative Measures on the Procurement and Use of Large Medical Equipment jointly promulgated by the NHC and National Medical Products Administration on March 3, 2023 and came into effect on the same day, the PRC government regulates large medical equipment through the classified and hierarchical allocation plan and through the issuance of the large medical equipment procurement licenseaccording to the catalogue.
Specifically, pursuant to the Administrative Measures on the Procurement and Use of Large Medical Equipment (For Trial Implementation) jointly promulgated by the NHC and National Medical Products Administration on May 22, 2018 and came into effect on the same day, the PRC government regulates large medical equipment through the classified and hierarchical allocation plan and through the issuance of the large medical equipment procurement license according to the Notice of the Issuance of Large Medical Equipment Allocation and Management Catalogue (2023) (“the Catalog”).
The PRC government has enacted a series of laws, regulations and governmental policies for the protection of personal data in the past few years.
In recent years, privacy and data protection has become an increasing regulatory focus of government authorities across the world. The PRC government has enacted a series of laws, regulations and governmental policies for the protection of personal data in the past few years.
If we are treated as a PFIC for any taxable year during which United States Holders (as defined in “Item 10. Additional Information—E.
In the event our passive income increases, we may be more likely to be a PFIC. If we are treated as a PFIC for any taxable year during which United States Holders (as defined in “Item 10. Additional Information—E.
As a result, our operations and our ability to make distributions to you could be materially adversely affected. We are subject to complex and evolving laws, regulations and governmental policies regarding privacy and data protection. Actual or alleged failure to comply with such laws, regulations and governmental policies could materially and adversely affect our business and reputation.
As a result, our operations and our ability to make distributions to you could be materially adversely affected. 38 Table of Contents We are subject to complex and evolving laws, regulations and governmental policies regarding privacy and data protection.
We may not be able to obtain such licenses in a timely manner or at all, which could delay or prevent the opening of our cancer hospitals and clinics, and could materially adversely affect our growth strategy and results of operations.
See “—We plan to establish and operate proton centers, and cancer hospitals and clinics that will be majority-owned by us and are subject to significant risks.” We may not be able to obtain such licenses in a timely manner or at all, which could delay or prevent the opening of our cancer hospitals and clinics, and could materially adversely affect our growth strategy and results of operations.
As techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us, we may be unable to anticipate, or implement adequate measures to protect against, these attacks. In the past, we had not been subject to these types of attacks that had materially and adversely affected our business operations.
As techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us, we may be unable to anticipate, or implement adequate measures to protect against, these attacks.
Cooperative centers located in Henan Province, Hubei Province and Shandong Province accounted for 10.6%, 8.1% and 5.9%, respectively, of our total net revenues in 2020. Cooperative centers located in Beijing Municipality, Chongqing Municipality and Inner Mongolia Autonomous Region accounted for 43.0%, 12.3% and 6.9%, respectively, of our total net revenues in 2021.
The largest hospital partner accounted for 8.3%, 5.0% and 2.4% of our total net revenues during those periods, respectively. Cooperative centers located in Beijing Municipality, Chongqing Municipality and Inner Mongolia Autonomous Region accounted for 43.0%, 12.3% and 6.9%, respectively, of our total net revenues in 2021.
As of December 31, 2022, we had an accumulated deficit of RMB3,766.9 million (US$546.2 million) and a total shareholders’ deficit of RMB1,864.0 million (US$270.3 million). As of the same date, we had net current liabilities of RMB361.4 million (US$52.4 million). These conditions raised substantial doubt about our ability to continue as a going concern.
As of December 31, 2023, we had an accumulated deficit of RMB4,064.6 million (US$572.5 million) and a total shareholders’ deficit of RMB2,121.9 million (US$298.9 million). As of the same date, we had net current liabilities of RMB1,334.2 million (US$188.0 million). These conditions raised substantial doubt about our ability to continue as a going concern.
In 2020, 2021 and 2022, we had net loss of RMB404.0 million, RMB522.7 million and RMB769.0 million (US$111.5 million), respectively, and negative cash flows from operating activities of RMB359.3 million and RMB216.7 million (US$31.4 million) in 2021 and 2022, respectively.
In 2021, 2022 and 2023, we had net loss of RMB522.7 million, RMB769.0 million and RMB531.0 million (US$74.8 million), respectively, and negative cash flows from operating activities of RMB216.7 million and RMB276.5 million (US$38.9 million) in 2022 and 2023, respectively.
The urban employees basic medical insurance scheme, which covers employed urban residents, partially reimburses urban workers for treatments utilizing linear accelerators and gamma knife systems and diagnostic imaging services utilizing CT and MRI scanners, with reimbursement levels varying from province to province.
Urban residents in China are covered by one of two urban public medical insurance schemes and rural residents are covered under a new rural healthcare insurance program launched in 2003. 18 Table of Contents The urban employees basic medical insurance scheme, which covers employed urban residents, partially reimburses urban workers for treatments utilizing linear accelerators and gamma knife systems and diagnostic imaging services utilizing CT and MRI scanners, with reimbursement levels varying from province to province.
While the full impact of this outbreak is unknown at this time, we are closely monitoring the rapid developments in China that have become exposed to the virus and continually assessing the potential impact on our business. Any prolonged deviations from normal daily operations could negatively impact our business.
However, any regional outbreak of COVID-19 may still subject our business, results of operations, financial condition and cash flows to uncertainties. While the full impact of this outbreak is unknown at this time, we are closely monitoring the rapid developments in China that have become exposed to the virus and continually assessing the potential impact on our business.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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We strategically ceased the operation of Datong Clinic since July 2022 to focus on the development of our Datong Hospital. We completed the the deregistration process of Datong Clinic in March 2023.
We strategically ceased the operation of Datong Clinic since July 2022 to focus on the development of our Datong Hospital. We completed the deregistration process of Datong Clinic in March 2023.
Specifically, our Jiahe Feiyun Intelligent Radiation Therapy Cloud Service Platform enables remote radiation therapy target delineation, radiation modeling, joint consultation, plan customization and quality control, our Jiahe Yunying Remote Imaging Information Diagnosi Platform enables digitalized display, storage, transmission, and processing of diagnostic pathology and diagnostic imaging results, and our Jiahe Cloud Asset Management Platform provides one-stop supply-chain management services with improved efficiency and reduced costs.
Specifically, our Jiahe Feiyun Intelligent Radiation Therapy Cloud Service Platform enables remote radiation therapy target delineation, radiation modeling, joint consultation, plan customization and quality control, our Jiahe Yunying Remote Imaging Information Diagnostic Platform enables digitalized display, storage, transmission, and processing of diagnostic pathology and diagnostic imaging results, and our Jiahe Cloud Asset Management Platform provides one-stop supply-chain management services with improved efficiency and reduced costs.
The Administrative Measures on Licensing of Urban Drainage The Administrative Measures on Licensing of Urban Drainage, which was promulgated by the Ministry of Housing and Urban-rural Development on January 22, 2015 and came into effect on March 1, 2015, provides that enterprises, institutions and individual industrial and commercial households engaging in industry, construction, catering industry, medical industry and discharging sewage into the urban drainage network must apply for and obtain a License for Urban Drainage. 68 Table of Contents Foreign Exchange Control and Administration Pursuant to the Foreign Exchange Administration Regulation promulgated on January 29, 1996, as amended on January 14, 1997 and August 5, 2008, and various regulations issued by the SAFE and other relevant PRC government authorities, the Renminbi is freely convertible only with respect to current account items, such as trade-related receipts and payments, interest and dividends.
The Administrative Measures on Licensing of Urban Drainage The Administrative Measures on Licensing of Urban Drainage, which was promulgated by the Ministry of Housing and Urban-rural Development on January 22, 2015 and came into effect on March 1, 2015, provides that enterprises, institutions and individual industrial and commercial households engaging in industry, construction, catering industry, medical industry and discharging sewage into the urban drainage network must apply for and obtain a License for Urban Drainage. 75 Table of Contents Foreign Exchange Control and Administration Pursuant to the Foreign Exchange Administration Regulation promulgated on January 29, 1996, as amended on January 14, 1997 and August 5, 2008, and various regulations issued by the SAFE and other relevant PRC government authorities, the Renminbi is freely convertible only with respect to current account items, such as trade-related receipts and payments, interest and dividends.
Initial Public Offering On December 11, 2009, our ADSs were listed on the NYSE. Dual Class Share Structure In January 2015, our shareholders approved the creation of a dual class share structure. In October 2018, Bluestone Holdings Limited, a company indirectly wholly owned by Mr. Zheng Cheng, transferred its shares in Morgancreek to companies wholly owned by Mr.
Initial Public Offering On December 11, 2009, our ADSs were listed on the NYSE. Dual Class Share Structure In January 2015, our shareholders approved the creation of a dual class share structure. In October 2018, Bluestone Holdings Limited, a company indirectly wholly owned by Mr. Zheng Cheng, transferred its shares in Morgancreek to companies wholly owned by Ms.
If the applicable authorities determine that we or our PRC optionees have failed to comply with these regulations, we or our PRC optionees may be subject to fines and legal sanctions. 70 Table of Contents Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including MOFCOM, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and the SAFE, jointly issued the M&A Rule, which became effective on September 8, 2006 and subsequently amended on June 22, 2009.
If the applicable authorities determine that we or our PRC optionees have failed to comply with these regulations, we or our PRC optionees may be subject to fines and legal sanctions. 77 Table of Contents Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including MOFCOM, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and the SAFE, jointly issued the M&A Rule, which became effective on September 8, 2006 and subsequently amended on June 22, 2009.
Sources: Ministry of Health, MHRSS, National Bureau of Statistics, and various other central and local PRC government websites. 67 Table of Contents Regulations on Environmental Protection Related to Medical Institutions Environmental Protection Law of PRC and Environmental Impact Assessment Law of the People’s Republic of China Pursuant to the Environmental Protection Law of the People’s Republic of China promulgated by the SCNPC on December 26, 1989 and became effective on the same day, amended on April 24, 2014 and became effective on January 1, 2015, the waste discharge licensing system has been implemented in the PRC and entities that discharge medical sewage to water bodies directly or indirectly shall obtain a waste discharge license.
Sources: Ministry of Health, MHRSS, National Bureau of Statistics, and various other central and local PRC government websites. 74 Table of Contents Regulations on Environmental Protection Related to Medical Institutions Environmental Protection Law of PRC and Environmental Impact Assessment Law of the People’s Republic of China Pursuant to the Environmental Protection Law of the People’s Republic of China promulgated by the SCNPC on December 26, 1989 and became effective on the same day, amended on April 24, 2014 and became effective on January 1, 2015, the waste discharge licensing system has been implemented in the PRC and entities that discharge medical sewage to water bodies directly or indirectly shall obtain a waste discharge license.
In January 2016, we acquired from Chang’an Information Industry (Group) Co., Ltd. 100% of the equity interests in Beijing Century Friendship, which held a 55% equity interest in Beijing Proton Medical Center, with a total consideration of RMB100.6 million.
In January 2016, we acquired from Chang’an Information Industry (Group) Co., Ltd. 100% of the equity interests in Beijing Century Friendship, which held a 55.0% equity interest in Beijing Proton Medical Center, with a total consideration of RMB100.6 million.
Furthermore, along with the promulgation of the Opinions on Strictly Combating Illegal Securities Activities, overseas-listed China-based companies are experiencing a heightened scrutiny over their compliance with laws and regulations regarding data security, cross-border data flow and management of confidential information from PRC regulatory authorities. 71 Table of Contents On August 20, 2021, the SCNPC issued the Personal Information Protection Law, which has been effective from November 1, 2021 and reiterates the circumstances under which a personal information processor could process personal information and the requirements for such circumstances.
Furthermore, along with the promulgation of the Opinions on Strictly Combating Illegal Securities Activities, overseas-listed China-based companies are experiencing a heightened scrutiny over their compliance with laws and regulations regarding data security, cross-border data flow and management of confidential information from PRC regulatory authorities. 78 Table of Contents On August 20, 2021, the SCNPC issued the Personal Information Protection Law, which has been effective from November 1, 2021 and reiterates the circumstances under which a personal information processor could process personal information and the requirements for such circumstances.
Risk Factors—Risks Related to Our Business and Industry—Most of our radiotherapy and diagnostic imaging equipment contains radioactive materials or emits radiation during operation.” Insurance We maintain property insurance on many of the medical equipment used in our cancer hospitals and cooperative centers to protect against loss in the event of fire, earthquake, flood and a wide range of natural disasters. 59 Table of Contents For the employed medical personnel at our cancer hospitals and clinics, we have obtained professional malpractice liability insurance for such cancer hospitals and clinics.
Risk Factors—Risks Related to Our Business and Industry—Most of our radiotherapy and diagnostic imaging equipment contains radioactive materials or emits radiation during operation.” Insurance We maintain property insurance on many of the medical equipment used in our cancer hospitals and cooperative centers to protect against loss in the event of fire, earthquake, flood and a wide range of natural disasters. 67 Table of Contents For the employed medical personnel at our cancer hospitals and clinics, we have obtained professional malpractice liability insurance for such cancer hospitals and clinics.
Risk Factors—Risks Related to Doing Business in China—PRC foreign exchange rules may limit our ability to acquire PRC companies and adversely affect the implementation of our strategy, business and prospects.” 69 Table of Contents Dividend Distributions Pursuant to the Foreign Exchange Administration Regulation promulgated in 1996, as amended in 1997 and 2008, and various regulations issued by the SAFE and other relevant PRC government authorities, the PRC government imposes restrictions on the convertibility of Renminbi into foreign currencies and, in certain cases, on the remittance of currency out of China.
Risk Factors—Risks Related to Doing Business in China—PRC foreign exchange rules may limit our ability to acquire PRC companies and adversely affect the implementation of our strategy, business and prospects.” 76 Table of Contents Dividend Distributions Pursuant to the Foreign Exchange Administration Regulation promulgated in 1996, as amended in 1997 and 2008, and various regulations issued by the SAFE and other relevant PRC government authorities, the PRC government imposes restrictions on the convertibility of Renminbi into foreign currencies and, in certain cases, on the remittance of currency out of China.
Moreover, any medical institution holding an interim permit must pay taxes on income derived from the use of the equipment covered by the interim permit and, upon the expiration of the useful life of such medical equipment, the medical institution must dispose of such equipment and is not permitted to replace it with a newer model. 62 Table of Contents Radiotherapy Permit Medical institutions that engage in radiotherapy are governed by the Regulatory Rules on Radiotherapy issued on January 24, 2006 by the NHC and are required to obtain a radiotherapy permit from the relevant healthcare administrative authorities.
Moreover, any medical institution holding an interim permit must pay taxes on income derived from the use of the equipment covered by the interim permit and, upon the expiration of the useful life of such medical equipment, the medical institution must dispose of such equipment and is not permitted to replace it with a newer model. 70 Table of Contents Radiotherapy Permit Medical institutions that engage in radiotherapy are governed by the Regulatory Rules on Radiotherapy issued on January 24, 2006 by the NHC and are required to obtain a radiotherapy permit from the relevant healthcare administrative authorities.
The healthcare administrative authorities and other government agencies, such as the NDRC, the SFDA, the MEP and MOFCOM, have promulgated rules and regulations relating to the procurement of large medical equipment, the pricing of medical services, the operation of radiotherapy equipment, the licensing and operation of medical institutions and the licensing of medical staff. 60 Table of Contents Permits Required by Our Company Medical Equipment Operating Enterprise Permits The SFDA categorizes medical equipment into three classes according to the level of control by the government authorities that, in the judgment of the SFDA, is required for their safe and effective operation.
The healthcare administrative authorities and other government agencies, such as the NDRC, the SFDA, the MEP and MOFCOM, have promulgated rules and regulations relating to the procurement of large medical equipment, the pricing of medical services, the operation of radiotherapy equipment, the licensing and operation of medical institutions and the licensing of medical staff. 68 Table of Contents Permits Required by Our Company Medical Equipment Operating Enterprise Permits The SFDA categorizes medical equipment into three classes according to the level of control by the government authorities that, in the judgment of the SFDA, is required for their safe and effective operation.
The amended measures are currently effective for a period of three years. 64 Table of Contents Pricing of Medical Services Pursuant to the Opinion Concerning the Reform of Medical Service Pricing Management issued by the NDRC and the NHC on July 20, 2000, medical services fees generated through the use of both Class A and Class B large medical equipment at nonprofit medical institutions are subject to the pricing guidelines of the relevant provincial or regional price control authorities and healthcare administrative authorities.
The amended measures are currently effective for a period of three years. 72 Table of Contents Pricing of Medical Services Pursuant to the Opinion Concerning the Reform of Medical Service Pricing Management issued by the NDRC and the NHC on July 20, 2000, medical services fees generated through the use of both Class A and Class B large medical equipment at nonprofit medical institutions are subject to the pricing guidelines of the relevant provincial or regional price control authorities and healthcare administrative authorities.
For-profit hospitals or centers based in for-profit hospitals in China, such as our self-owned cancer hospitals and clinics, are not subject to such pricing restrictions and are entitled to set medical service fees based on their cost structures, market demand and other factors. 57 Table of Contents Business Development Our hospital investment team is responsible for pursuing opportunities to establish proton centers, and cancer hospitals and clinics and our business development team is responsible for pursuing opportunities to develop cooperative centers with hospitals.
For-profit hospitals or centers based in for-profit hospitals in China, such as our self-owned cancer hospitals and clinics, are not subject to such pricing restrictions and are entitled to set medical service fees based on their cost structures, market demand and other factors. 65 Table of Contents Business Development Our hospital investment team is responsible for pursuing opportunities to establish proton centers, and cancer hospitals and clinics and our business development team is responsible for pursuing opportunities to develop cooperative centers with hospitals.
The cancer hospitals and clinics that we plan to develop will be established as for-profit medical institutions. 61 Table of Contents Medical Institution Practicing License Pursuant to the Regulation on Medical Institution issued on February 26, 1994 and amended on February 6, 2016 by the PRC State Council, any organization or individual that intends to establish a medical institution must obtain a medical institution practicing license from the relevant healthcare administrative authorities.
The cancer hospitals and clinics that we plan to develop will be established as for-profit medical institutions. 69 Table of Contents Medical Institution Practicing License Pursuant to the Regulation on Medical Institution issued on February 26, 1994 and amended on February 6, 2016 by the PRC State Council, any organization or individual that intends to establish a medical institution must obtain a medical institution practicing license from the relevant healthcare administrative authorities.
Aohua Leasing subsequently changed its name to Aohua Technology. 41 Table of Contents On July 31, 2008, our subsidiary Ascendium acquired 100% of the equity interests in China Medstar Pte. Ltd. (“China Medstar,” subsequently known as Concord Medical Services (International) Pte. Ltd.), together with its wholly owned PRC subsidiary, Shanghai Medstar, for approximately £17.1 million.
Aohua Leasing subsequently changed its name to Aohua Technology. 49 Table of Contents On July 31, 2008, our subsidiary Ascendium acquired 100% of the equity interests in China Medstar Pte. Ltd. (“China Medstar,” subsequently known as Concord Medical Services (International) Pte. Ltd.), together with its wholly owned PRC subsidiary, Shanghai Medstar, for approximately £17.1 million.
Specifically, in 2020 and 2021, we launched Jiahe Feiyun Intelligent Radiation Therapy Cloud Service Platform, Jiahe Yunying Remote Imaging Information Diagnosis Platform and Jiahe Cloud Asset Management Platform, as integral components to our cloud system solutions which focus on the efficiency and efficacy of cancer diagnosis and treatment. 48 Table of Contents We also developed an internet hospital that focuses on cancer diagnosis and treatment.
Specifically, in 2020 and 2021, we launched Jiahe Feiyun Intelligent Radiation Therapy Cloud Service Platform, Jiahe Yunying Remote Imaging Information Diagnosis Platform and Jiahe Cloud Asset Management Platform, as integral components to our cloud system solutions which focus on the efficiency and efficacy of cancer diagnosis and treatment. 56 Table of Contents We also developed an internet hospital that focuses on cancer diagnosis and treatment.
Head gamma knife systems can also be used to treat other conditions, such as certain types of brain lesions, trigeminal neuralgia (facial pain) and arteriovenous malformations (abnormal connection between veins and arteries). 54 Table of Contents Diagnostic Imaging We employ a wide range of diagnostic imaging equipment at our cancer hospitals and cooperative centers.
Head gamma knife systems can also be used to treat other conditions, such as certain types of brain lesions, trigeminal neuralgia (facial pain) and arteriovenous malformations (abnormal connection between veins and arteries). 62 Table of Contents Diagnostic Imaging We employ a wide range of diagnostic imaging equipment at our cancer hospitals and cooperative centers.
We have implemented accounting procedures at each of the cooperative centers in our network, and perform periodic reviews to help ensure that such activities are properly conducted. 56 Table of Contents Medical Equipment Maintenance and Repair The equipment manufacturers or third-party service companies typically carry out equipment maintenance and repair.
We have implemented accounting procedures at each of the cooperative centers in our network, and perform periodic reviews to help ensure that such activities are properly conducted. 64 Table of Contents Medical Equipment Maintenance and Repair The equipment manufacturers or third-party service companies typically carry out equipment maintenance and repair.
As of the date of this annual report, we conduct substantially all of our operations through Datong Hospital, Shanghai Imaging Center, Guangzhou Outpatient Department, Guangzhou Hospital, Shanghai Outpatient Department, Shanghai General Practice Clinic and Yinchuan Meizhong Jiahe Internet Hospital Ltd. in PRC for our hospital business and the following subsidiaries for our network business in the PRC: ● Aohua Technology, our subsidiary incorporated in the PRC, which provides radiotherapy and diagnostic equipment leasing services to hospitals in the PRC; ● Shanghai Medstar, our subsidiary incorporated in the PRC, which sells medical equipment and provides radiotherapy and diagnostic equipment leasing and management services to hospitals in the PRC; ● Concord Healthcare , our subsidiary incorporated in the PRC, which provides radiotherapy and diagnostic equipment management services to hospitals in the PRC; and ● Beijing Yundu, our subsidiary incorporated in the PRC, which provides teleconsultation, and medical information technology services in the PRC.
As of the date of this annual report, we conduct substantially all of our operations through Datong Hospital, Shanghai Imaging Center, Guangzhou Outpatient Department, Guangzhou Hospital, Shanghai Outpatient Department, Shanghai General Practice Clinic and Yinchuan Meizhong Jiahe Internet Hospital Ltd. in PRC for our hospital business and the following subsidiaries for our network business in the PRC: ● Aohua Technology, our subsidiary incorporated in the PRC, which provides radiotherapy and diagnostic equipment leasing services to hospitals in the PRC; ● Shanghai Medstar, our subsidiary incorporated in the PRC, which sells medical equipment and provides radiotherapy and diagnostic equipment leasing and management services to hospitals in the PRC; ● Concord Healthcare , our subsidiary incorporated in the PRC, which provides radiotherapy and diagnostic equipment management services to hospitals in the PRC; and 53 Table of Contents ● Beijing Yundu, our subsidiary incorporated in the PRC, which provides teleconsultation, and medical information technology services in the PRC.
The cancer hospitals and clinics are licensed as for-profit hospitals in China and subject to PRC laws and regulations and permits requirements. 49 Table of Contents In order to establish a medical institution, we need to apply for and receive approvals and permits/licenses from various government authorities and agencies.
The cancer hospitals and clinics are licensed as for-profit hospitals in China and subject to PRC laws and regulations and permits requirements. 57 Table of Contents In order to establish a medical institution, we need to apply for and receive approvals and permits/licenses from various government authorities and agencies.
As a result, we disposed of our equity intesrest in MD Anderson Proton Therapy Center. In October 2014, we established a wholly-owned free-standing radiotherapy cancer center, Datong Hospital in Datong City, Shanxi Province, to provide advanced diagnostic and radiotherapy services with 100 beds.
As a result, we disposed of our equity interest in MD Anderson Proton Therapy Center. In October 2014, we established a wholly-owned free-standing radiotherapy cancer center, Datong Hospital in Datong City, Shanxi Province, to provide advanced diagnostic and radiotherapy services with 100 beds.
However, employment relationships established prior to the implementation of the Labor Law without a written employment agreement were required to be memorialized by a written employment agreement that satisfies the requirements of the Labor Law within one month after it became effective on January 1, 2008. 72 Table of Contents C.
However, employment relationships established prior to the implementation of the Labor Law without a written employment agreement were required to be memorialized by a written employment agreement that satisfies the requirements of the Labor Law within one month after it became effective on January 1, 2008. ​ ​ ​ 79 Table of Contents C.
The table below summarizes certain key aspects of these three medical insurance programs: ​ Urban Employee Basic Medical Insurance Program Urban Residents Basic Medical Insurance Program Rural Cooperative Medical Program ​ ​ ​ ​ ​ ​ ​ Launch Time ​ 1998 ​ 2007 ​ 2003 ​ ​ ​ ​ ​ ​ ​ Participants ​ Urban employees ​ Urban non-employees ​ Rural residents ​ ​ ​ ​ ​ ​ ​ Participation ​ Mandatory ​ Voluntary ​ Voluntary ​ ​ ​ ​ ​ ​ ​ Number of People covered in 2010 ​ Approximately 237 million (36% of China’s urban population) ​ Approximately 195 million (29% of China’s urban population) ​ Approximately 815 million (96% of China’s rural population) ​ ​ ​ ​ ​ ​ ​ Total reimbursement amount ​ RMB180.0 billion in 2009 ​ N/A ​ RMB66.2 billion in 2010 65 Table of Contents ​ Urban Employee Basic Medical Insurance Program Urban Residents Basic Medical Insurance Program Rural Cooperative Medical Program ​ ​ ​ ​ ​ ​ ​ Funding ​ Employers and employees: ● employer contributes approximately 6% of each employee’s total salary; and ​ Households and the government: ● monthly premium are paid by each household; and ​ Individuals and the government: ● individual pays no less than RMB20 per year and local government subsidizes no less than RMB40 per person annually; and ​ ​ ​ ​ ​ ​ ​ ​ ​ ● employee contributes approximately 2% of such employee’s total salary. ​ ● government subsidizes no less than RMB80 per person annually and RMB40 per person annually for the mid/western regions of China, with greater subsidies provided to low-income families and disabled persons. ​ ● government subsidizes RMB40 per person annually for the middle and western regions of the country and a smaller amount for the eastern region. ​ ​ ​ ​ ​ ​ ​ General Reimbursement Policy ​ Reimbursement comes from two sources—individual’s reimbursement account and the social medical expense pool: ​ There is no specific requirement or guidance from the central government.
Currently no reimbursement is available for proton therapy treatments. ​ 73 Table of Contents The table below summarizes certain key aspects of these three medical insurance programs: ​ Urban Employee Basic Medical Insurance Program Urban Residents Basic Medical Insurance Program Rural Cooperative Medical Program ​ ​ ​ ​ ​ ​ ​ Launch Time ​ 1998 ​ 2007 ​ 2003 ​ ​ ​ ​ ​ ​ ​ Participants ​ Urban employees ​ Urban non-employees ​ Rural residents ​ ​ ​ ​ ​ ​ ​ Participation ​ Mandatory ​ Voluntary ​ Voluntary ​ ​ ​ ​ ​ ​ ​ Number of People covered in 2010 ​ Approximately 237 million (36% of China’s urban population) ​ Approximately 195 million (29% of China’s urban population) ​ Approximately 815 million (96% of China’s rural population) ​ ​ ​ ​ ​ ​ ​ Total reimbursement amount ​ RMB180.0 billion in 2009 ​ N/A ​ RMB66.2 billion in 2010 ​ ​ ​ ​ ​ ​ ​ Funding ​ Employers and employees: ● employer contributes approximately 6% of each employee’s total salary; and ​ Households and the government: ● monthly premium are paid by each household; and ​ Individuals and the government: ● individual pays no less than RMB20 per year and local government subsidizes no less than RMB40 per person annually; and ​ ​ ​ ​ ​ ​ ​ ​ ​ ● employee contributes approximately 2% of such employee’s total salary. ​ ● government subsidizes no less than RMB80 per person annually and RMB40 per person annually for the mid/western regions of China, with greater subsidies provided to low-income families and disabled persons. ​ ● government subsidizes RMB40 per person annually for the middle and western regions of the country and a smaller amount for the eastern region. ​ ​ ​ ​ ​ ​ ​ General Reimbursement Policy ​ Reimbursement comes from two sources—individual’s reimbursement account and the social medical expense pool: ​ There is no specific requirement or guidance from the central government.
Operating Results—Financial Impact of Our Acquisitions and Disposals.” As part of our growth strategy, we plan to (1) establish and operate proton centers and expand the operations of our cancer hospitals and clinics, (2) provide cloud system solutions of medical devices for more enterprise customers, (3) further develop our internet hospital focusing on remote cancer services, and (4) further develop our medical equipment leasing and management business.
Operating Results—Financial Impact of Our Acquisitions and Disposals.” 55 Table of Contents As part of our growth strategy, we plan to (1) establish and operate proton centers and expand the operations of our cancer hospitals and clinics, (2) provide cloud system solutions of medical devices for more enterprise customers, (3) further develop our internet hospital focusing on remote cancer services, and (4) further develop our medical equipment leasing and management business.
As of December 31, 2022, we had six self-owned cancer hospitals and clinics in operation in China, including two cancer hospitals, three cancer diagnosis and treatment clinics and one imaging diagnosis center. In addition, we also operate an internet hospital. We were also in the process of constructing Shanghai Hospital as of December 31, 2022.
As of December 31, 2023, we had six self-owned cancer hospitals and clinics in operation in China, including two cancer hospitals, three cancer diagnosis and treatment clinics and one imaging diagnosis center. In addition, we also operate an internet hospital. We were also in the process of constructing Shanghai Hospital as of December 31, 2023.
When we state that we own certain properties in China, we own the relevant land use rights because land is owned by the PRC government under the PRC land system. 73 Table of Contents The following table sets forth the details of our leased and self-owned properties for hospital and clinic use as of the date of this annual report: ​ Location Planned/ Actual Size (in square meters) Planned/ Actual Capacity (beds) Usage of Property Nature of Properties Status (5) (6) Shanghai (1) ​ 158,769 ​ 400 ​ Shanghai Hospital ​ Owned ​ Under construction ​ Guangzhou (2) ​ 40,000 ​ 400 ​ Guangzhou Hospital ​ Owned ​ In operation ​ Guangzhou (3) ​ 1,555 ​ — ​ Guangzhou Outpatient Department ​ Leased (Expire in May 2027) ​ In operation ​ Datong ​ 143 ​ — ​ Datong Clinic ​ Leased (Expire in August 2022) ​ Deregistered ​ Datong ​ 5,983 ​ 100 ​ Datong Hospital ​ Leased (Expire in September 2034) ​ In operation ​ Shanghai ​ 3,015 ​ — ​ Shanghai Outpatient Department ​ Leased (Expire in September 2026) ​ In operation ​ Shanghai ​ 10,429 ​ — ​ Shanghai Imaging Center ​ Leased (Expire in September 2036) ​ In operation ​ Shanghai (4) ​ 557 ​ — ​ Shanghai General Practice Clinic ​ Leased (Expire in December 2036) ​ In operation ​ (1) In July 2015, we entered into the land use rights grant contract for a parcel of land in Shanghai with an aggregate site area of approximately 47,867 square meters for the construction of our planned Shanghai Hospital.
When we state that we own certain properties in China, we own the relevant land use rights because land is owned by the PRC government under the PRC land system. ​ The following table sets forth the details of our leased and self-owned properties for hospital and clinic use as of the date of this annual report: ​ Location Planned/ Actual Size (in square meters) Planned/ Actual Capacity (beds) Usage of Property Nature of Properties Status (5) (6) Shanghai (1) ​ 158,769 ​ 400 ​ Shanghai Hospital ​ Owned ​ Under construction ​ Guangzhou (2) ​ 40,000 ​ 400 ​ Guangzhou Hospital ​ Owned ​ In operation ​ Guangzhou (3) ​ 1,555 ​ — ​ Guangzhou Outpatient Department ​ Leased (Expire in May 2027) ​ In operation ​ Datong ​ 5,983 ​ 100 ​ Datong Hospital ​ Leased (Expire in September 2034) ​ In operation ​ Shanghai ​ 3,015 ​ — ​ Shanghai Outpatient Department ​ Leased (Expire in September 2026) ​ In operation ​ Shanghai ​ 10,429 ​ — ​ Shanghai Imaging Center ​ Leased (Expire in September 2036) ​ In operation ​ Shanghai (4) ​ 557 ​ — ​ Shanghai General Practice Clinic ​ Leased (Expire in December 2036) ​ In operation ​ (1) In July 2015, we entered into the land use rights grant contract for a parcel of land in Shanghai with an aggregate site area of approximately 47,867 square meters for the construction of our planned Shanghai Hospital.
Guangzhou Hospital has already been in operation since June 2021, and we plan to commence the construction of the phase II expansion to Guangzhou Hospital in 2023. By completion of the construction project, the aggregate site area is expected to reach 40,000 square meters.
Guangzhou Hospital has already been in operation since June 2021, and we plan to commence the construction of the phase II expansion to Guangzhou Hospital in 2026. By completion of the construction project, the aggregate site area is expected to reach 40,000 square meters.
These treatments may be more effective or less costly, or both, compared to the treatment methods that our hospital and centers provide. 58 Table of Contents Intellectual Property To protect our corporate name, we have applied to the PRC Trademark Office of the State Administration for Market Regulation (formerly known as the State Administration for Industry and Commerce) for and obtained the registration of our trademark “Medstar” in October 2009 and a total of 92 other trademarks, including “Concord Medical,” as of the date of this annual report.
These treatments may be more effective or less costly, or both, compared to the treatment methods that our hospital and centers provide. 66 Table of Contents Intellectual Property To protect our corporate name, we have applied to the PRC Trademark Office of the State Administration for Market Regulation (formerly known as the State Administration for Industry and Commerce) for and obtained the registration of our trademark “Medstar” in October 2009 and a total of 168 other trademarks, including “Concord Medical,” as of the date of this annual report.
In October 2018, we obtained the control of Beijing Century Friendship, Beijing Proton Medical Center and Shanghai Outpatient Department. As of the date of this annual report, we held a 100.0% equity interest in Beijing Century Friendship and an 80.0% equity interest in Beijing Proton Medical Center.
In October 2018, we obtained the control of Beijing Century Friendship, Beijing Proton Medical Center and Shanghai Outpatient Department. As of the date of this annual report, we held a 100.0% equity interest in Beijing Century Friendship and an 55.0% equity interest in Beijing Proton Medical Center.
As of December 31, 2022, we had six self-owned cancer hospitals and clinics in operation in China, including two cancer hospitals, three cancer diagnosis and treatment clinics and one imaging diagnosis center. In addition, we also operate an internet hospital.
As of December 31, 2023, we had six self-owned cancer hospitals and clinics in operation in China, including two cancer hospitals, three cancer diagnosis and treatment clinics and one imaging diagnosis center. In addition, we also operate an internet hospital.
Under certain of these arrangements, our hospital partners must compensate us based on the average contracted percentage for an agreed upon period of time if we are not responsible for the early termination. 52 Table of Contents Our sales-type leases with hospital partners often include an option to the hospitals to purchase the underlying asset which the hospitals are reasonably certain to exercise.
Under certain of these arrangements, our hospital partners must compensate us based on the average contracted percentage for an agreed upon period of time if we are not responsible for the early termination. Our sales-type leases with hospital partners often include an option to the hospitals to purchase the underlying asset which the hospitals are reasonably certain to exercise.
The results of such reviews will later be used in salary determinations, bonus awards and promotion appraisals 55 Table of Contents We typically staff each cooperative center with dedicated marketing and accounting personnel.
The results of such reviews will later be used in salary determinations, bonus awards and promotion appraisals 63 Table of Contents We typically staff each cooperative center with dedicated marketing and accounting personnel.
The business substance of the purchase was to acquire Guangzhou Outpatient Department, which was a wholly owned subsidiary of Guangzhou Concord Management located in downtown Guangzhou. (4) Shanghai General Practice Clinic is located inside the building of Shanghai Imaging Center and shares its leased property. (5) See “—B. Business Overview—Our Network of Centers” and “—B.
The business substance of the purchase was to acquire Guangzhou Outpatient Department, which was a wholly owned subsidiary of Guangzhou Concord Management located in downtown Guangzhou. 81 Table of Contents (4) Shanghai General Practice Clinic is located inside the building of Shanghai Imaging Center and shares its leased property. (5) See “—B. Business Overview—Our Network of Centers” and “—B.
Guangzhou Outpatient Department is an affiliated oncology specialty outpatient department to our Guangzhou Hospital. Located in downtown Guangzhou, it primarily provides cancer screening, diagnosis, treatment and health management services for outpatients. 44 Table of Contents Guangzhou Hospital is a comprehensive cancer hospital offering a full spectrum of cancer care for both inpatients and outpatients, which commenced operation in June 2021.
Guangzhou Outpatient Department is an affiliated oncology specialty outpatient department to our Guangzhou Hospital. Located in downtown Guangzhou, it primarily provides cancer screening, diagnosis, treatment and health management services for outpatients. Guangzhou Hospital is a comprehensive cancer hospital offering a full spectrum of cancer care for both inpatients and outpatients, which commenced operation in June 2021.
In addition, after Guofu Huimei became our wholly-owned subsidiary, Shanghai Rongchi and Tianjin Jiatai became our equity investees. During 2019, Tianjin Jiatai made capital injection in a total of RMB34.5 million to Shanghai Imaging Center, and increased the equity interest in it from 56.77% to 78.34%.
We held a 100% equity interest in Guofu Huimei. In addition, after Guofu Huimei became our wholly-owned subsidiary, Shanghai Rongchi and Tianjin Jiatai became our equity investees. During 2019, Tianjin Jiatai made capital injection in a total of RMB34.5 million to Shanghai Imaging Center, and increased the equity interest in it from 56.77% to 78.34%.
For outpatients who intend to receive diagnostic examinations at Shanghai Imaging Center without an examination prescription, Shanghai General Practice Clinic provides patient recipient and diagnostic examination prescription services to avoid patients’ trouble of getting a prescription at another hospital. 51 Table of Contents Our Internet Hospital We launched our internet hospital in May 2021.
For outpatients who intend to receive diagnostic examinations at Shanghai Imaging Center without an examination prescription, Shanghai General Practice Clinic provides patient recipient and diagnostic examination prescription services to avoid patients’ trouble of getting a prescription at another hospital. Our Internet Hospital We launched our internet hospital in May 2021.
Hao Zhou and Ms. Bi Zhang, the spouse of Dr. Jianyu Yang, respectively. On the same day, all the Class A ordinary shares held by Morgancreek were converted into Class B ordinary shares. Morgancreek transferred 7,500,000 Class B ordinary shares to Bluestone. Upon completion of these transactions, Mr. Zhou and Ms.
Sirong Tian and Ms. Bi Zhang, the spouse of Dr. Jianyu Yang, respectively. On the same day, all the Class A ordinary shares held by Morgancreek were converted into Class B ordinary shares. Morgancreek transferred 7,500,000 Class B ordinary shares to Bluestone. Upon completion of these transactions, Mr. Zhou and Ms.
Reimbursement policy is separately determined by local governments. ​ The central government suggests that, beginning in the second half of 2009, the reimbursement cap for all regions should be no less than six times the average annual per capita net income of rural residents in the region. ​ ​ ​ ​ ​ ​ ​ ​ ​ ● all of the employee’s contribution and 30% of the employer’s contribution are allocated to the individual’s reimbursement account; the reimbursement cap from the individual account is the balance of that account; and ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 66 Table of Contents ​ Urban Employee Basic Medical Insurance Program Urban Residents Basic Medical Insurance Program Rural Cooperative Medical Program ​ ​ ● the remaining 70% of the employers’ contribution is aggregated into a social medical expense pool; the reimbursement cap from the social medical expense pool for an individual participant in a calendar year is around four times the regional average annual salary. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Examples of Local Reimbursement Policy ​ Shanghai : reimbursement cap from the social medical expense pool for an individual participant in a calendar year is approximately four times the average annual salary in Shanghai from the previous year. ​ Jiangsu Province : approximately 50% to 60% of medical expense can be reimbursed by the program. ​ Guangdong Province : maximum reimbursement amount is approximately RMB50,000 per person per year. ​ ​ ​ ​ ​ ​ ​ ​ ​ Inner Mongolia : reimbursement cap from the social medical expense pool for an individual participant in a calendar year is RMB25,000. ​ Sichuan Province : approximately 60% (and not less than 50%) of medical expense can be reimbursed by the program. ​ Hubei Province : maximum reimbursement mount for hospitalizations hospitalization is approximately RMB30,000 per person per year. ​ ​ ​ ​ Guangdong Province : approximately 40% to 60% of medical expense can be reimbursed by the program; maximum reimbursement amount is approximately two times the average annual salary in Guangdong Province from the previous year. ​ Anhui Province : maximum reimbursement amount for hospitalization is approximately RMB30,000 per person per year.
Reimbursement policy is separately determined by local governments. ​ The central government suggests that, beginning in the second half of 2009, the reimbursement cap for all regions should be no less than six times the average annual per capita net income of rural residents in the region. ​ ​ ​ ​ ​ ​ ​ ​ ​ ● all of the employee’s contribution and 30% of the employer’s contribution are allocated to the individual’s reimbursement account; the reimbursement cap from the individual account is the balance of that account; and ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ● the remaining 70% of the employers’ contribution is aggregated into a social medical expense pool; the reimbursement cap from the social medical expense pool for an individual participant in a calendar year is around four times the regional average annual salary. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Examples of Local Reimbursement Policy ​ Shanghai : reimbursement cap from the social medical expense pool for an individual participant in a calendar year is approximately four times the average annual salary in Shanghai from the previous year. ​ Jiangsu Province : approximately 50% to 60% of medical expense can be reimbursed by the program. ​ Guangdong Province : maximum reimbursement amount is approximately RMB50,000 per person per year. ​ ​ ​ ​ ​ ​ ​ ​ ​ Inner Mongolia : reimbursement cap from the social medical expense pool for an individual participant in a calendar year is RMB25,000. ​ Sichuan Province : approximately 60% (and not less than 50%) of medical expense can be reimbursed by the program. ​ Hubei Province : maximum reimbursement mount for hospitalizations hospitalization is approximately RMB30,000 per person per year. ​ ​ ​ ​ Guangdong Province : approximately 40% to 60% of medical expense can be reimbursed by the program; maximum reimbursement amount is approximately two times the average annual salary in Guangdong Province from the previous year. ​ Anhui Province : maximum reimbursement amount for hospitalization is approximately RMB30,000 per person per year.
Management Services From time to time, we provide management services to radiotherapy and diagnostic imaging centers under service-only agreements. As of December 31, 2022, we did not operate cooperative centers under service-only agreements.
Management Services From time to time, we provide management services to radiotherapy and diagnostic imaging centers under service-only agreements. As of December 31, 2023, we did not operate cooperative centers under service-only agreements.
Risk Factors—Risks Related to Our Business and Industry—Certain of the medical services and products provided in our cancer hospitals and cooperative centers are effectively subject to regulatory price controls, which may reduce our profitability.” The relevant price control authorities and healthcare administrative authorities provide notices to hospitals, which in turn provide immediate notices to us, as to any change in the pricing ceiling for medical services.
Risk Factors—Risks Related to Our Business and Industry—Certain of the medical services and products provided in our cancer hospitals and cooperative centers are effectively subject to regulatory price controls due to our voluntary price-matching policies, which may reduce our profitability.” The relevant price control authorities and healthcare administrative authorities provide notices to hospitals, which in turn provide immediate notices to us, as to any change in the pricing ceiling for medical services.
In response to this regulatory change, we have replaced the majority of our cooperation agreements with non-profit hospitals with leasing and management agreements. Regulation of Proton Treatment Centers Pursuant to the Administrative Measures on Clinical Application of Medical Technology, effective as of May 1, 2009, medical institutions must apply to the NHC for approval before utilizing certain medical technologies.
In response to this regulatory change, we have replaced the majority of our cooperation agreements with non-profit hospitals with leasing and management agreements. Regulation of Proton Treatment Centers Pursuant to the Administrative Measures on Clinical Application of Medical Technology, effective as of November 1, 2018, medical institutions must apply to the NHC for approval before utilizing certain medical technologies.
Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Certain of the medical services and products provided in our cancer hospitals and cooperative centers are effectively subject to regulatory price controls, which may reduce our profitability.” Medical Insurance Coverage China has a complex medical insurance system that is currently undergoing reform.
Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Certain of the medical services and products provided in our cancer hospitals and cooperative centers are effectively subject to regulatory price controls due to our voluntary price-matching policies, which may reduce our profitability.” Medical Insurance Coverage China has a complex medical insurance system that is currently undergoing reform.
We also own the rights to 90 domain names that we use in connection with the operation of our business as of the same date.
We also own the rights to 98 domain names that we use in connection with the operation of our business as of the same date.
Major factors that contribute to the increase of cancer cases include demographic reasons, such as aging population and obesity prevalence. 46 Table of Contents Radiotherapy is considered a mature treatment for many types of cancer.
Major factors that contribute to the increase of cancer cases include demographic reasons, such as aging population and obesity prevalence. Radiotherapy is considered a mature treatment for many types of cancer.
See ““—Our Cloud System Solutions.” Our Cloud System Solutions To further expand our services to a broader patient base, we have integrated our online and offline medical resources into our cloud system solutions to offer cloud-based services, including primarily cloud-based remote diagnostic imaging, radiation therapy, supply-chain management and comprehensive support services.
See ““—Our Cloud System Solutions.” 60 Table of Contents Our Cloud System Solutions To further expand our services to a broader patient base, we have integrated our online and offline medical resources into our cloud system solutions to offer cloud-based services, including primarily cloud-based remote diagnostic imaging, radiation therapy, supply-chain management and comprehensive support services.
As of the same date, we provided equipment leasing and comprehensive support services for 14 cooperative centers based in 11 hospitals, spanning over 11 cities across eight provinces and administrative regions in China.
As of the same date, we provided equipment leasing and comprehensive support services for 10 cooperative centers based in eight hospitals, spanning over eight cities across five provinces and administrative regions in China.
As of December 31, 2022, we had such agreements at three cooperative centers among the totality of our 14 cooperative centers. Similar to management services arrangements, we do not invest in the medical equipment installed at the cooperative centers. Instead, we provide technical support, equipment and software maintenance and tele-diagnosis services to cooperative centers in exchange for a fixed fee.
As of December 31, 2023, we had such agreements at one cooperative centers among the totality of our 10 cooperative centers. Similar to management services arrangements, we do not invest in the medical equipment installed at the cooperative centers. Instead, we provide technical support, equipment and software maintenance and tele-diagnosis services to cooperative centers in exchange for a fixed fee.
See “—B. Business Overview—Environment Matters” regarding the environment issues which may affect our utilization of our assets. ​ ITEM 4A. UNRESOLVED STAFF COMMENTS None. ​
Business Overview—Environment Matters” regarding the environment issues which may affect our utilization of our assets. ​ ITEM 4A. UNRESOLVED STAFF COMMENTS None. ​
Organizational Structure” for our effective equity interests in our subsidiaries as of December 31, 2022.
Organizational Structure” for our effective equity interests in our subsidiaries as of December 31, 2023.
Our Network Business As of December 31, 2022, we operated an extensive network of 14 cooperative centers based in 11 hospitals, spanning over 11 cities across eight provinces and administrative regions in China. These hospitals substantially consist of 3A hospitals, the highest ranked hospitals by quality and size in China based on the standards of the NHC.
Our Network Business As of December 31, 2023, we operated an extensive network of 10 cooperative centers based in eight hospitals, spanning over eight cities across five provinces and administrative regions in China. These hospitals substantially consist of 3A hospitals, the highest ranked hospitals by quality and size in China based on the standards of the NHC.
The catalogue divides large medical equipment into Class A and Class B. For large medical equipment classified as Class A large medical equipment, which includes proton therapy systems, quotas are set by the NHC and the NDRC and large medical equipment procurement licenses are issued by the NHC.
For large medical equipment classified as Class A large medical equipment, which includes proton therapy systems, quotas are set by the NHC and the NDRC and large medical equipment procurement licenses are issued by the NHC.
The following table sets forth our leased properties for office space use as of the date of this annual report: ​ Location Size (in square meters) Expiration Date Usage of Property Beijing ​ 1,379 ​ July 2023 ​ Office space ​ Beijing ​ 29 ​ June 2023 ​ Office space ​ Shanghai ​ 30 ​ October 2023 ​ Office space ​ Shenzhen ​ 157 ​ November 2024 ​ Office space ​ Guangzhou ​ 181 ​ January 2024 ​ Office space ​ ​ We also own certain properties in China to establish and operate cancer hospitals and clinics as part of our business expansion.
The following table sets forth our leased properties for office space use as of the date of this annual report: ​ Location Size (in square meters) Expiration Date Usage of Property Beijing ​ 1,310 ​ March 2026 ​ Office space ​ Beijing ​ 29 ​ June 2024 ​ Office space ​ Shanghai ​ 30 ​ October 2024 ​ Office space ​ Shenzhen ​ 157 ​ November 2024 ​ Office space ​ ​ We also own certain properties in China to establish and operate cancer hospitals and clinics as part of our business expansion.
As of December 31, 2022, we owned seven MRI scanners, two PET-CT scanners and one PET-MR scanner at our cancer hospitals and cooperative centers.
As of December 31, 2023, we owned five MRI scanners, two PET-CT scanners and one PET-MR scanner at our cancer hospitals and cooperative centers.
In September and December 2016, Concord Healthcare completed two rounds of private offerings of additional shares and received proceeds of approximately RMB141.7 million, after which we held an 85.34% equity interest in Concord Healthcare. In February 2018, Concord Healthcare was delisted from NEEQ.
In September and December 2016, Concord Healthcare completed two rounds of private offerings of additional shares and received proceeds of approximately RMB141.7 million, after which we held an 85.34% equity interest in Concord Healthcare.
Organizational Structure ​ The following diagram illustrates our company’s organizational structure, and the place of formation, ownership interest and affiliation of each of our principal subsidiaries and consolidated affiliated entities as of December 31, 2022. ​ ​ D.
Organizational Structure ​ The following diagram illustrates our company’s organizational structure, and the place of formation, ownership interest and affiliation of each of our principal subsidiaries and consolidated affiliated entities as of December 31, 2023. ​ ​ ​ ​ ​ 80 Table of Contents D.
Mortality of cancer per year in China increased from approximately 2.4 million in 2016 to approximately 2.7 million in 2021 and is estimated to reach approximately 3.2 million in 2025. The number of cancer cases and cancer-caused death is expected to increase in the next decade.
Mortality of cancer per year in China increased from approximately 2.4 million in 2016 to approximately 2.8 million in 2022 and is estimated to reach approximately 3.3 million in 2026. The number of cancer cases and cancer-caused death is expected to increase in the next decade.
Such requirements include, among other things, that medical institutions that are eligible for providing proton and heavy ion radiotherapy must, among other things, meet the following requirements: (i) be compatible to their functions, missions, and technical capabilities; (ii) have certain diagnostic and treatment departments including oncology, radiotherapy, pathology and medical imaging that are certified to register with the NHC; (iii) have more than ten years of experience in IMRT cancer treatment and no less than 10,000 cancer patient visists per year; (iv) meet the national standards for radiation protection and have received the certificates from hygiene supervision and environmental protection government agencies; (v) have a radiotherapy department meeting the following criteria: 63 Table of Contents a) have clinicians, radiation physicists and technicians, and maintenance personnel for accelerators; b) have more than ten years of experience in radiotherapy treatment, with no less than 2,000 annually admitted patient visits; c) have CT model locator, accelerator with multi-leaf collimator, reverse treatment planning system, quality assurance and control equipment, etc.; d) have 3D imaging guidance technology, more than 3 years of experience with online 3D image-guided radiotherapy, IMRT, and SRT; and e) be equipped with proton or ion therapy system in accordance with the guidance of NHC; (vi) have a imaging department meeting the following criteria: a) have imaging diagnosis equipment including MRI, CT, PET-CT, etc.; b) have medical imaging management system; and c) have conducted imaging diagnosis, including nuclear medicine, for over ten years; and (vii) have at least three registered doctors and three full-time physicists qualified for clinical practice of proton or ion radiotherapy techniques, and other professionals compatible to or qualified in training on related knowledge and skills of proton or ion radiotherapy.
Such requirements include, among other things, that medical institutions that are eligible for providing proton and heavy ion radiotherapy must, among other things, meet the following requirements: (i) be compatible to their functions, missions, and technical capabilities; (ii) have certain diagnostic and treatment departments including oncology, radiotherapy, pathology and medical imaging that are certified to register with the NHC; (iii) have more than ten years of experience in IMRT cancer treatment and no less than 10,000 cancer patient visitors per year; (iv) meet the national standards for radiation protection and have received the certificates from hygiene supervision and environmental protection government agencies; (v) have advanced network systems to support the application of 5G and above advanced information and communication technologies in proton or heavy ion radiotherapy; 71 Table of Contents (vi) have a radiotherapy department meeting the following criteria: a) have clinicians, radiation physicists and technicians, and maintenance personnel for accelerators; b) have more than ten years of experience in radiotherapy treatment, with no less than 2,000 annually admitted patient visits; c) have CT model locator, accelerator with multi-leaf collimator, reverse treatment planning system, quality assurance and control equipment, etc.; d) have 3D imaging guidance technology, more than 3 years of experience with online 3D image-guided radiotherapy, IMRT, and SRT; and e) be equipped with proton or ion therapy system in accordance with the guidance of NHC; (vii) have an imaging department meeting the following criteria: a) have imaging diagnosis equipment including MRI, CT, PET-CT, etc.; b) have medical imaging management system; and c) have at least five registered doctors who conducted imaging diagnosis, including nuclear medicine, for over ten years.
Our total net revenues were RMB223.0 million, RMB485.6 million and RMB472.1 million (US$68.4 million) in 2020, 2021 and 2022, respectively. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Key Components of Results of Operations—Revenues” regarding our total net revenues by segments and our total net revenues by geographic regions in 2020, 2021 and 2022.
Our total net revenues were RMB485.6 million, RMB472.1 million and RMB537.4 million (US$75.7 million) in 2021, 2022 and 2023, respectively. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Key Components of Results of Operations—Revenues” regarding our total net revenues by segments and our total net revenues by geographic regions in 2021, 2022 and 2023.
However, the reimbursement levels for covered medical expenses for urban non-workers and rural residents, which vary widely from region to region and treatment to treatment, are generally lower than those for urban employees in the same region. Currently no reimbursement is available for proton therapy treatments.
However, the reimbursement levels for covered medical expenses for urban non-workers and rural residents, which vary widely from region to region and treatment to treatment, are generally lower than those for urban employees in the same region.
Business Overview—Legal and Administrative Proceedings.” 42 Table of Contents On February 22, 2016, the board of Concord Healthcare approved a restructuring plan (the “Reorganization”), pursuant to which Concord Healthcare acquired 100% of the equity interests in Aohua Technology with a consideration of approximately RMB322.7 million in cash and 100% of the equity interests in Beijing Century Friendship with a consideration of approximately RMB100.6 million in cash.
On February 22, 2016, the board of Concord Healthcare approved a restructuring plan (the “Reorganization”), pursuant to which Concord Healthcare acquired 100% of the equity interests in Aohua Technology with a consideration of approximately RMB322.7 million in cash and 100% of the equity interests in Beijing Century Friendship with a consideration of approximately RMB100.6 million in cash.
We commenced construction of Shanghai Hospital in September 2017 with an estimated construction period of five years. The construction project was prolonged due to the suspension of construction activities caused by the COVID-19 pandemic. We expect to commence the operation of Shanghai Hospital in 2024 and complete the follow-on construction of its proton center in 2025.
The construction of this hospital project commenced in September 2017 with an estimated construction period of five years. The construction project was prolonged due to the suspension of construction activities caused by the COVID-19 pandemic. We expect to commence the operation of Shanghai Hospital in January 2026 and commence the operation of its proton center in 2027.
We remained control of Concord Healthcare with 50.23% of the voting right of Concord Healthcare as of December 31, 2022. We established Shanghai Imaging Center in January 2018, which commenced operation in April 2020.
We remained control of Concord Healthcare with 50.08% of the voting right of Concord Healthcare as of December 31, 2023. 52 Table of Contents We established Shanghai Imaging Center in January 2018, which commenced operation in April 2020.
The treatment is typically completed in one ten to 30 minute session rather than in multiple daily sessions spanning several weeks during which time small doses of radiation are given at each session.
Head gamma knife systems are primarily used for the treatment of brain tumors. The treatment is typically completed in one ten to 30 minute session rather than in multiple daily sessions spanning several weeks during which time small doses of radiation are given at each session.
We have completed the construction of the proton center of our Guangzhou Hospital, and we expect to complete the construction of the proton center of Shanghai Hospital deployed with the proton equipment in 2025. In addition, we commenced the construction of Beijing Proton Medical Center in June 2017.
We have completed the construction of the proton center of our Guangzhou Hospital, and we expect to commence operation of the proton center of Shanghai Hospital deployed in 2027. In addition, we commenced the construction of Beijing Proton Medical Center in June 2017.
The construction was suspended and delayed due to the COVID-19 pandemic and the failure of one of the shareholders to perform its obligations under the related cooperation agreements. As of the date of this annual report, the cooperation agreements for the Beijing Proton Medical Center project have been terminated.
The construction was suspended and delayed due to the COVID-19 pandemic and the failure of one of the shareholders to perform its obligations under the related cooperation agreements. The cooperation agreements for the Beijing Proton Medical Center project was terminated in 2022.
With the growing demand and improving access for cancer treatment, the market size of China’s oncology healthcare service market, in terms of revenue, grew from RMB265.6 billion in 2016 to RMB466.1 billion in 2021, at a CAGR of 11.9%, and is expected to reach RMB719.2 billion in 2025, at a CAGR of 11.5% from 2021 to 2025.
With the growing demand and improving access for cancer treatment, the market size of China’s oncology healthcare service market, in terms of revenue, grew from RMB265.6 billion in 2016 to RMB495.1 billion in 2022, at a CAGR of 10.9%, and is expected to reach RMB768.7 billion in 2026, at a CAGR of 11.6% from 2022 to 2026.
We had previously entered into a series of cooperation agreements with Chang’an Information Industry (Group) Co., Ltd. and certain other shareholder of Beijing Proton Medical Center, which contemplated for us to invest equity capital to Beijing Proton Medical Center project.
In February 2018, Concord Healthcare was delisted from NEEQ. 50 Table of Contents We had previously entered into a series of cooperation agreements with Chang’an Information Industry (Group) Co., Ltd. and certain other shareholder of Beijing Proton Medical Center, which contemplated for us to invest equity capital to Beijing Proton Medical Center project.
Our Cancer Clinics In May 2017, we opened Shanghai Outpatient Department in Shanghai to provide outpatient services, imaging diagnosis services and daily radiotherapy and chemotherapy services. Patients at Shanghai Outpatient Department can enjoy public medical insurance reimbursement for our services including outpatient consultation, chemotherapy, accelerator radiotherapy, laboratory tests and imaging tests (such as MRI, CT, B-ultrasound, mammography, electrocardiogram).
Patients at Shanghai Outpatient Department can enjoy public medical insurance reimbursement for our services including outpatient consultation, chemotherapy, accelerator radiotherapy, laboratory tests and imaging tests (such as MRI, CT, B-ultrasound, mammography, electrocardiogram).
In accordance with “2018 to 2020 Plan,” the total number of PET-CT large medical equipment procurement licenses issued in China cannot exceed 884 from the date of the plan through the end of 2020, and the total number of large medical equipment procurement licenses issued for gamma knife systems cannot exceed 296 nationwide.
In accordance with “14th Five-Year Plan ,” the total number of PET-CT large medical equipment procurement licenses issued in China cannot exceed 860 from the date of the plan through the end of 2025, and the total number of large medical equipment procurement licenses issued for gamma knife systems cannot exceed 95 nationwide.
We also commenced construction of Guangzhou Hospital in November 2017, and the construction was completed in October 2020. Guangzhou Hospital has been in operation since June 2021. In addition, we also plan to commence the construction of the phase II expansion to Guangzhou Hospital in 2023. Shanghai Imaging Center has officially opened and has commenced operation since April 2020.
In addition, we also plan to commence the construction of the phase II expansion to Guangzhou Hospital in 2026. Shanghai Imaging Center has officially opened and has commenced operation since April 2020.
It provides advanced, best-practice diagnostic and radiotherapy services with 100 beds and a gross floor area of 5,983 square meters. In October 2014, we established a wholly-owned radiotherapy cancer center, Datong Hospital in Datong City, Shanxi Province. Datong Hospital opened preliminarily in May 2016 and officially opened for operation in May 2017.
Datong Hospital Datong Hospital is the first independent cancer specialty hospital in our system, which has officially been in operation since May 2017. It provides advanced, best-practice diagnostic and radiotherapy services with 100 beds and a gross floor area of 5,983 square meters. In October 2014, we established a wholly-owned radiotherapy cancer center, Datong Hospital in Datong City, Shanxi Province.
According to “2018 to 2020 Plan” issued by NHC on July 31, 2020, the national master plan configures a maximum of 16 newly added proton therapy treatment systems between 2018 and 2020. The allocation will depend on the actual situation of regional function orientation, radiation capacity of medical services and the service level of diagnosis and treatment of medical institutions.
According to “14th Five-Year Plan ” issued by NHC on July 21, 2023, the national master plan configures a maximum of 41 newly added proton therapy treatment systems between 2021 and 2025. The allocation will depend on the actual situation of regional function orientation, radiation capacity of medical services and the service level of diagnosis and treatment of medical institutions.
On January 25, 2016, Concord Healthcare completed its listing on the National Equities Exchange and Quotations, (“NEEQ”) which is also known as the New Third Board in China, for a private placement financing.
Our divestment of Concord International Hospital allows us to fully concentrate on our efforts to operate hospital business in China. On January 25, 2016, Concord Healthcare completed its listing on the National Equities Exchange and Quotations, (“NEEQ”) which is also known as the New Third Board in China, for a private placement financing.
Cancer has become a serious global public health problem. According to the independent industry report prepared by our industry consultant, China had a large number of newly diagnosed cancer patients and cancer-related deaths in 2021, accounting for approximately 23% of the new cancer cases and 27% of the cancer-related deaths worldwide.
According to the independent industry report prepared by our industry consultant, China had a large number of newly diagnosed cancer patients and cancer-related deaths in 2022, accounting for approximately 23.8% of the new cancer cases and 26.9% of the cancer-related deaths worldwide.
Large Medical Equipment Procurement License Pursuant to the Administrative Measures on the Procurement and Use of Large Medical Equipment jointly promulgated by the NHC and National Medical Products Administration on March 3, 2023 and came into effect on the same day, the PRC government regulates large medical equipment through the classified and hierarchical allocation plan and through the issuance of large medical equipment procurement license according to the catalogue.
Large Medical Equipment Procurement License Pursuant to the Administrative Measures on the Procurement and Use of Large Medical Equipment (For Trial Implementation) jointly promulgated by the NHC and National Medical Products Administration on May 22, 2018 and came into effect on the same day, the PRC government regulates large medical equipment through the classified and hierarchical allocation plan and through the issuance of the large medical equipment procurement license according to the Catalog, which divides large medical equipment into Class A and Class B.
We have also procured a set of proton therapy equipment in February 2022, which is held by Concord Healthcare for future deployment based on its business needs. In addition, we expect to complete the construction of the proton center of Shanghai Hospital deployed with the proton equipment in 2025.
We have commenced the clinical trial for the proton therapy equipment in the proton center of Guangzhou Hospital in November 2022. We have also procured a set of proton therapy equipment in February 2022, which is held by Concord Healthcare for future deployment based on its business needs.
Our network includes 11 radiotherapy centers and three diagnostic imaging centers. Each cooperative center is typically equipped with a primary unit of medical equipment, such as a linear accelerator, head gamma knife system, PET-CT scanner or MRI scanner. Each cooperative center is located on the premises of our hospital partners with the facilities of the centers provided by the hospitals.
Our network includes nine radiotherapy centers and one diagnostic imaging center. 59 Table of Contents Each cooperative center is typically equipped with a primary unit of medical equipment, such as a linear accelerator, head gamma knife system, PET-CT scanner or MRI scanner.
We typically establish such centers with hospitals by entering into a lease agreement and a management agreement. Under these lease and management services arrangements, we are responsible for purchasing the medical equipment used in these cooperative centers. We lease medical equipment to hospitals for a fixed period and establish and manage the cooperative centers in conjunction with our hospital partners.
Lease and Management Services Arrangements As of December 31, 2023, we had nine cooperative centers established under lease and management services arrangements. We typically establish such centers with hospitals by entering into a lease agreement and a management agreement. Under these lease and management services arrangements, we are responsible for purchasing the medical equipment used in these cooperative centers.
On November 13, 2009, the NHC issued the Trial Administrative Rules on Proton and Heavy Ion Radiotherapy Technologies, which provide the guidelines for government authorities to review and approve applications of medical institutions for clinical use of proton and heavy ion radiotherapy technologies.
On March 30, 2022, the NHC issued the National Standard for Clinical Application Management of Restricted Technologies, which provide the guidelines for government authorities to review and approve applications of medical institutions for clinical use of proton and heavy ion radiotherapy technologies.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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We only apply the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. 96 Table of Contents Once a contract is determined to be within the scope of ASC 606 at contract inception, we review the contract to determine which performance obligations we must deliver and which of these performance obligations are distinct.
We only apply the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. 104 Table of Contents Once a contract is determined to be within the scope of ASC 606 at contract inception, we review the contract to determine which performance obligations we must deliver and which of these performance obligations are distinct.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any known trends, uncertainties, demands, commitments or events in 2022 that are reasonably likely to materially adversely affect our net revenues, income, profitability, liquidity or capital resources, or that caused the reported financial information not necessarily to be indicative of our future operating results or financial condition.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any known trends, uncertainties, demands, commitments or events in 2023 that are reasonably likely to materially adversely affect our net revenues, income, profitability, liquidity or capital resources, or that caused the reported financial information not necessarily to be indicative of our future operating results or financial condition.
If we are considered as non-resident enterprise and required under the EIT Law to pay income tax for any dividends we receive from our subsidiaries, it will materially and adversely affect the amount of dividends, if any, we may pay to our shareholders and ADS holders. 84 Table of Contents Results of Operations The following table sets forth a summary, for the periods indicated, of our consolidated results of operations.
If we are considered as non-resident enterprise and required under the EIT Law to pay income tax for any dividends we receive from our subsidiaries, it will materially and adversely affect the amount of dividends, if any, we may pay to our shareholders and ADS holders. 92 Table of Contents Results of Operations The following table sets forth a summary, for the periods indicated, of our consolidated results of operations.
We allocate the lease and non-lease components of the contract consideration on a relative standalone selling price basis. 100 Table of Contents Operating lease income We elected the package of practical expedients which allowed us not to separate lease and non-lease components for diagnostic imaging and /or radiation oncology systems assets and recognizes profit sharing revenue under ASC 842.
We allocate the lease and non-lease components of the contract consideration on a relative standalone selling price basis. 108 Table of Contents Operating lease income We elected the package of practical expedients which allowed us not to separate lease and non-lease components for diagnostic imaging and /or radiation oncology systems assets and recognizes profit sharing revenue under ASC 842.
Operating Results Overview We provide a full spectrum of oncology healthcare services to cancer patients across the entire care continuum through our self-owned cancer hospitals and clinics. As of December 31, 2022, we had six self-owned cancer hospitals and clinics in operation in China, including two cancer hospitals, three cancer diagnosis and treatment clinics and one imaging diagnosis center.
Operating Results Overview We provide a full spectrum of oncology healthcare services to cancer patients across the entire care continuum through our self-owned cancer hospitals and clinics. As of December 31, 2023, we had six self-owned cancer hospitals and clinics in operation in China, including two cancer hospitals, three cancer diagnosis and treatment clinics and one imaging diagnosis center.
In accordance with ASC Topic 350, Goodwill and Other Intangible Assets, (“ASC 350”), recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present. 101 Table of Contents In accordance with ASC 350, we assigned and assessed goodwill for impairment at the reporting unit level.
In accordance with ASC Topic 350, Goodwill and Other Intangible Assets, (“ASC 350”), recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present. 109 Table of Contents In accordance with ASC 350, we assigned and assessed goodwill for impairment at the reporting unit level.
For the year ended December 31, 2021 and 2022, we elected to bypass the qualitative assessment and proceed directly to performing the quantitative goodwill impairment testing. We considered the future discounted cash flows expected to be generated by the hospital business and network business, respectively, to determine the fair value of each reporting unit.
For the year ended December 31, 2022 and 2023, we elected to bypass the qualitative assessment and proceed directly to performing the quantitative goodwill impairment testing. We considered the future discounted cash flows expected to be generated by the hospital business and network business, respectively, to determine the fair value of each reporting unit.
Our net revenues generated from hospital business increased by 35.0% to RMB217.6 million (US$31.5 million) in 2022 from RMB161.2 million in 2021, primarily due to the ramp-up of our hospitals and clinics, especially Guangzhou Hospital which only started to generate revenues since June 2021, partially offset by a decrease in net revenues generated from Shanghai Outpatient Department and Shanghai Imaging Center because of the temporary closure in the second quarter of 2022 as a result of the containment measure imposed in Shanghai amid the regional resurgence of COVID-19.
Our net revenues generated from hospital business increased by 35.0% to RMB217.6 million in 2022 from RMB161.2 million in 2021, primarily due to the ramp-up of our hospitals and clinics, especially Guangzhou Hospital which only started to generate revenues since June 2021, partially offset by a decrease in net revenues generated from Shanghai Outpatient Department and Shanghai Imaging Center because of the temporary closure in the second quarter of 2022 as a result of the containment measure imposed in Shanghai amid the regional resurgence of COVID-19.
When we need additional cash resources, financing may only be available to us in amounts or on terms that would not be acceptable to us or financing may not be available at all. 94 Table of Contents Restrictions on Cash Dividends, Loans or Advances We conduct our business primarily through our consolidated subsidiaries incorporated in China.
When we need additional cash resources, financing may only be available to us in amounts or on terms that would not be acceptable to us or financing may not be available at all. 102 Table of Contents Restrictions on Cash Dividends, Loans or Advances We conduct our business primarily through our consolidated subsidiaries incorporated in China.
Fixed monthly fees are recognized ratably over the service term. 97 Table of Contents Medical Solutions Medical solutions represented sales of different sets of medical equipment like CT machines, DR machines and respirators to procurement agent of the hospitals in PRC and the sales of consumables such as surgical supplies to certain hospitals in PRC.
Fixed monthly fees are recognized ratably over the service term. 105 Table of Contents Medical Solutions Medical solutions represented sales of different sets of medical equipment like CT machines, DR machines and respirators to procurement agent of the hospitals in PRC and the sales of consumables such as surgical supplies to certain hospitals in PRC.
Cost of Sales-Type Lease Cost of sales-type lease as a lessor is recorded as the carrying value of the underlying asset at lease commencement. 98 Table of Contents Cost of Management and Technical Support Cost of management and technical support mainly include labor costs, and, where applicable, medical consumables and maintenance expenses which are expensed as incurred.
Cost of Sales-Type Lease Cost of sales-type lease as a lessor is recorded as the carrying value of the underlying asset at lease commencement. 106 Table of Contents Cost of Management and Technical Support Cost of management and technical support mainly include labor costs, and, where applicable, medical consumables and maintenance expenses which are expensed as incurred.
The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. 99 Table of Contents We classify a lease as an operating lease when it does not meet any one of these criteria.
The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. 107 Table of Contents We classify a lease as an operating lease when it does not meet any one of these criteria.
We did not record any impairment loss for the years ended December 31, 2021 and 2022 as the fair value of the reporting unit is in excess of its carrying value. Intangible Assets, Net Intangible assets are carried at cost less accumulated amortization and any recorded impairment.
We did not record any impairment loss for the years ended December 31, 2022 and 2023 as the fair value of the reporting unit is in excess of its carrying value. Intangible Assets, Net Intangible assets are carried at cost less accumulated amortization and any recorded impairment.
In addition to our cooperative centers, we are establishing cancer hospitals and clinics in China. As of December 31, 2022, we had six self-owned cancer hospitals and clinics in operation in China, including two cancer hospitals, three cancer diagnosis and treatment clinics and one imaging diagnosis center. In addition, we also operate an internet hospital.
In addition to our cooperative centers, we are establishing cancer hospitals and clinics in China. As of December 31, 2023, we had six self-owned cancer hospitals and clinics in operation in China, including two cancer hospitals, three cancer diagnosis and treatment clinics and one imaging diagnosis center. In addition, we also operate an internet hospital.
Hong Kong Our subsidiaries in Hong Kong do not conduct any substantive operations of their own. No provision for Hong Kong profits tax was made in the consolidated financial statements as we had no assessable profits for for the years ended December 31, 2020, 2021 and 2022.
Hong Kong Our subsidiaries in Hong Kong do not conduct any substantive operations of their own. No provision for Hong Kong profits tax was made in the consolidated financial statements as we had no assessable profits for the years ended December 31, 2021, 2022 and 2023.
Our cost of revenues of hospital business increased by 38.3% to RMB399.3 million (US$57.8 million) in 2022 from RMB288.7 million in 2021, primarily due to (1) an increase in hospital operating expenses such as medicine costs, medical consumables, and water, electricity and property charges of RMB35.3 million (US$5.1 million) driven by the ramping up of our hospitals and clinics, (2) an increase in depreciation of RMB29.4 million (US$4.3 million) associated with our medical equipment and facilities, and (3) an increase in staff cost of RMB28.4 million (US$4.1 million) primarily for medical professionals at our Guangzhou Hospital since its opening in June 2021, which was previously recorded as general and administrative expenses.
Our cost of revenues of hospital business increased by 38.3% to RMB399.3 million in 2022 from RMB288.7 million in 2021, primarily due to (1) an increase in hospital operating expenses such as medicine costs, medical consumables, and water, electricity and property charges of RMB35.3 million driven by the ramping up of our hospitals and clinics, (2) an increase in depreciation of RMB29.4 million associated with our medical equipment and facilities, and (3) an increase in staff cost of RMB28.4 million primarily for medical professionals at our Guangzhou Hospital since its opening in June 2021, which was previously recorded as general and administrative expenses.
Revenues derived from providing management services through service-only agreements are accounted for as “management services” on our consolidated statement of operations. As of December 31, 2022, we did not operate cooperative centers under service-only agreements.
Revenues derived from providing management services through service-only agreements are accounted for as “management services” on our consolidated statement of operations. As of December 31, 2023, we did not operate cooperative centers under service-only agreements.
Our net revenues generated from our network business decreased by 21.6% to RMB254.4 million (US$36.9 million) in 2022 from RMB324.4 million in 2021, primarily due to (1) a decrease in net revenues generated from medical solutions of RMB38.2 million (US$5.5 million) as the delivery and acceptance process of our medical solutions was negatively affected by the COVID-19 outbreak in 2022, (2) a decrease in net revenues generated from operating lease of RMB17.7 million (US$2.6 million) as the operations of our hospital partners were negatively affected by the the regional resurgence of COVID-19 in 2022, and (3) a decrease in net revenues generated from management and technical support of RMB11.3 million (US$1.6 million) as a result of the expiration of agreements with certain management and technical support customers in 2022.
Our net revenues generated from our network business decreased by 21.6% to RMB254.4 million in 2022 from RMB324.4 million in 2021, primarily due to (1) a decrease in net revenues generated from medical solutions of RMB38.2 million as the delivery and acceptance process of our medical solutions was negatively affected by the COVID-19 outbreak in 2022, (2) a decrease in net revenues generated from operating lease of RMB17.7 million as the operations of our hospital partners were negatively affected by the regional resurgence of COVID-19 in 2022, and (3) a decrease in net revenues generated from management and technical support of RMB11.3 million as a result of the expiration of agreements with certain management and technical support customers in 2022.
When the non-controlling interest is mandatory redeemable on a fixed or determinable date, the non-controlling interest is classified as liabilities. 103 Table of Contents If a transaction does not meet the definition of a business, the transaction is recorded as an asset acquisition.
When the non-controlling interest is mandatory redeemable on a fixed or determinable date, the non-controlling interest is classified as liabilities. 111 Table of Contents If a transaction does not meet the definition of a business, the transaction is recorded as an asset acquisition.
Our gross margin of hospital business decreased to negative 83.4% in 2022 from negative 79.1% in 2021, primarily due to (1) the decreased net revenues generated from Shanghai Outpatient Department and Shanghai Imaging Center as a result of their temporary closure in the second quarter of 2022 amid the regional resurgence of COVID-19, and (2) the substantial costs for our other hospitals and clinics during the ramp-up stage, especially our Guangzhou Hospital.
Our gross margin of hospital business decreased to negative 83.4% in 2022 from negative 79.1% in 2021, primarily due to (1) the decreased net revenues generated from Shanghai Outpatient Department and Shanghai Imaging Center as a result of their temporary closure in the second quarter of 2022 amid the regional resurgence of COVID-19, and (2) the substantial costs for our other hospitals and clinics during the ramp-up stage, especially our Guangzhou Hospital. 96 Table of Contents Network Business .
We had foreign exchange loss, net of RMB19.9 million and foreign exchange gain, net RMB55.0 million (US$8.0 million) in 2021 and 2022, primarily due to fluctuations in exchange rate. Loss on Disposal of Long-lived Assets.
Foreign Exchange (Loss) Gain, Net . We had foreign exchange loss, net of RMB19.9 million and foreign exchange gain, net RMB55.0 million in 2021 and 2022, primarily due to fluctuations in exchange rate. Loss on Disposal of Long-lived Assets.
General and administrative expenses decreased by 10.5% to RMB311.1 million (US$45.1 million) in 2022 from RMB347.7 million in 2021, primarily due to (1) a decrease in staff cost of RMB27.7 million (US$4.0 million) as the related cost for medical professionals at our Guangzhou Hospital was recorded under cost of revenues since its opening in June 2021, and (2) the decreased scale of our network business as a result of the negative impact of COVID-19.
General and administrative expenses decreased by 10.5% to RMB311.1 million in 2022 from RMB347.7 million in 2021, primarily due to (1) a decrease in staff cost of RMB27.7 million as the related cost for medical professionals at our Guangzhou Hospital was recorded under cost of revenues since its opening in June 2021, and (2) the decreased scale of our network business as a result of the negative impact of COVID-19.
We will focus on the following activities: (1) we plan to seek additional equity and debt financing from new investors into our hospital and network business operation and extend the terms of current loans; (2) we plan to improve the profitability of network business and hospital business through upgrading cloud system solutions, developing internet hospital business, accelerating the transformation of scientific research and training achievements into clinical application and so on; and (3) we are currently focusing on improving operational efficiency and reducing cost to standardize operations, enhance internal controls, and create synergy of our resources.
We will focus on the following activities: (1) we plan to seek additional equity and debt financing from new investors into our hospital and network business operation and extend the terms of current loans; (2) we plan to improve the profitability of network business and hospital business through, among others, upgrading cloud system solutions, accelerating the transformation of scientific research and training achievements into clinical application; and (3) we are currently focusing on improving operational efficiency and reducing cost to standardize operations, enhance internal controls, and create synergy of our resources.
In November 2020, we entered into a definitive agreement to sell 90% equity interest in Concord Healthcare Singapore Pte Ltd, which operates and owns a general medical and surgical hospital, namely Concord International Hospital, for a total consideration of approximately SG$52.2 million.
In November 2020, we entered into a definitive agreement to sell 90% equity interest in Concord Healthcare Singapore Pte Ltd, which operates and owns a general medical and surgical hospital, namely Concord International Hospital, for a total consideration of approximately SGD52.2 million.
We typically purchase the medical equipment used in our network of centers and lease such equipment to our hospital partners. 75 Table of Contents Factors Affecting Our Results of Operations Our financial performance and results of operations are generally affected by the number of cancer patients in China and in the regions in which we have operations.
We typically purchase the medical equipment used in our network of centers and lease such equipment to our hospital partners. Factors Affecting Our Results of Operations Our financial performance and results of operations are generally affected by the number of cancer patients in China and in the regions in which we have operations.
Our operating expenses decreased by 7.2% to RMB372.6 million (US$54.0 million) in 2022 from RMB401.4 million in 2021, primarily due to the negative effect of COVID-19 outbreak in 2022, partially offset by the opening of our Guangzhou Hospital since June 2021. Selling Expenses .
Our operating expenses decreased by 7.2% to RMB372.6 million in 2022 from RMB401.4 million in 2021, primarily due to the negative effect of COVID-19 outbreak in 2022, partially offset by the opening of our Guangzhou Hospital since June 2021. Selling Expenses .
Network Business . Our cost of revenues of network business decreased by 11.3% to RMB225.2million (US$32.7 million) in 2022 from RMB253.8 million in 2021, primarily due to a decrease in cost of medical equipment of RMB18.4 million (US$2.7 million), which was generally in line with the decreased scale of medical solutions. Gross Loss and Gross Margin .
Network Business . Our cost of revenues of network business decreased by 11.3% to RMB225.2million in 2022 from RMB253.8 million in 2021, primarily due to a decrease in cost of medical equipment of RMB18.4 million, which was generally in line with the decreased scale of medical solutions. Gross Loss and Gross Margin .
Generally, patients claim reimbursements, if any, is available under the applicable public or private medical insurance plans. As a result, hospitals do not generally experience bad debt problems. However, the healthcare reform announced by the PRC government in January 2009 has introduced pilot public medical insurance plans.
Generally, patients claim reimbursements, if any is available under the applicable public or private medical insurance plans. As a result, hospitals do not generally experience bad debt problems. 88 Table of Contents However, the healthcare reform announced by the PRC government in January 2009 has introduced pilot public medical insurance plans.
Our capital expenditures in 2022 decreased by RMB602.7 million (US$87.4 million) as compared to RMB33.7 million in 2021, primarily due to decreases in purchase of construction in progress and deposits for the purchases of property, plant and equipment.
Our capital expenditures in 2022 decreased by RMB602.7 million as compared to RMB33.7 million in 2021, primarily due to decreases in purchase of construction in progress and deposits for the purchases of property, plant and equipment.
Cost of Revenues . Total cost of revenues increased by 15.1% to RMB624.5 million (US$90.5 million) in 2022 from RMB542.5 million in 2021. Hospital Business .
Cost of Revenues . Total cost of revenues increased by 15.1% to RMB624.5 million in 2022 from RMB542.5 million in 2021. Hospital Business .
Network Business . Our gross profit of network business decreased by 58.6% to RMB29.2 million (US$4.2 million) in 2022 from RMB70.6 million in 2021.
Our gross profit of network business decreased by 58.6% to RMB29.2 million in 2022 from RMB70.6 million in 2021.
As of December 31, 2022, we provided equipment leasing and comprehensive support services for 14 cooperative centers based in 11 hospitals, spanning over 11 cities across eight provinces and administrative regions in China. We have established most of the cooperative centers in our network through long-term lease and management services arrangements with hospitals typically ranging from five to 20 years.
As of December 31, 2023, we provided equipment leasing and comprehensive support services for 10 cooperative centers based in eight hospitals, spanning over eight cities across five provinces and administrative regions in China. We have established most of the cooperative centers in our network through long-term lease and management services arrangements with hospitals typically ranging from five to 20 years.
Risk Factors— Risks Related to Our Business and Industry— Certain of the medical services and products provided in our cancer hospitals and cooperative centers are effectively subject to regulatory price controls, which may reduce our profitability” and “Item 4. Information on the Company—B.
Risk Factors— Risks Related to Our Business and Industry— Certain of the medical services and products provided in our cancer hospitals and cooperative centers are effectively subject to regulatory price controls due to our voluntary price-matching policies, which may reduce our profitability” and “Item 4. Information on the Company—B.
Net cash used in operating activities for the year ended December 31, 2022 was RMB216.7 million (US$31.4 million), resulting primarily from our net loss of RMB769.0 million (US$111.5 million), as adjusted by the reconciliation of certain non-cash items, including (1) loss from agreements cancellation with a cooperative hospital of RMB204.3 million (US$29.6 million), (2) interest and consultation expenses of RMB120.4 million (US$17.5 million), (3) depreciation of property, plant and equipment of RMB88.7 million (US$12.9 million), (4) loss on disposal of susidiary of RMB61.5 million (US$8.9 million), (5) amortization of intangible assets of RMB34.5 million (US$5.0 million) and (6) lease expense to reduce operating lease ROU of RMB19.3 million (US$2.8 million), and were partially offset by (1) deferred tax benefit of RMB71.8 million (US$10.4 million), and (2) income from equity method investments of RMB17.6 million (US$2.6 million).
Net cash used in operating activities for the year ended December 31, 2022 was RMB216.7 million, resulting primarily from our net loss of RMB769.0 million, as adjusted by the reconciliation of certain non-cash items, including (1) loss from agreements cancellation with a cooperative hospital of RMB204.3 million, (2) interest and consultation expenses of RMB120.4 million, (3) depreciation of property, plant and equipment of RMB88.7 million, (4) loss on disposal of subsidiary of RMB61.5 million, (5) amortization of intangible assets of RMB34.5 million and (6) lease expense to reduce operating lease ROU of RMB19.3 million, and were partially offset by (1) deferred tax benefit of RMB71.8 million, and (2) income from equity method investments of RMB17.6 million.
As of December 31, 2022, there were still two reporting units after the disposal of Guofu Huimei, which was divided into hospital business before disposal. We early adopted ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, (“ASU 2017-04”).
As of December 31, 2022 and 2023, there are still two reporting units after the disposal of the Guofu Huimei, which was divided into hospital business before disposal. We early adopted ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, (“ASU 2017-04”).
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Total Net Revenues . Our total net revenues decreased by 2.8% to RMB472.1 million (US$68.4 million) in 2022 from RMB485.6 million in 2021. Hospital Business.
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Total Net Revenues . Our total net revenues decreased by 2.8% to RMB472.1 million in 2022 from RMB485.6 million in 2021. Hospital Business.
Our selling expenses increased by 14.5% to RMB61.5 million (US$8.9 million) in 2022 from RMB53.7 million in 2021, primarily due to an increase in staff cost of RMB11.3 million (US$1.6 million) as a result of the expansion of our sales and marketing team to accommodate the increasing marketing demands of Guangzhou Hospital, which commenced operation in June 2021.
Our selling expenses increased by 14.5% to RMB61.5 million in 2022 from RMB53.7 million in 2021, primarily due to an increase in staff cost of RMB11.3 million as a result of the expansion of our sales and marketing team to accommodate the increasing marketing demands of Guangzhou Hospital, which commenced operation in June 2021.
We had impairment of long-lived assets of RMB8.5 million, nil and nil in 2020, 2021 and 2022, respectively. Share-based Compensation On October 16, 2008, our board of directors adopted the 2008 share incentive plan. The plan provided for the grant of options, share appreciation rights, or other share-based awards to key employees, directors or consultants.
We had impairment of long-lived assets of nil, nil and nil in 2021, 2022 and 2023, respectively. Share-based Compensation On October 16, 2008, our board of directors adopted the 2008 share incentive plan. The plan provided for the grant of options, share appreciation rights, or other share-based awards to key employees, directors or consultants.
We closed four cooperative centers, 11 cooperative centers and eight cooperative centers in 2020, 2021 and 2022, respectively, due to expiration of the arrangements with certain of these cooperative centers as well as our focus on developing our hospital business going forward.
We closed 11 cooperative centers, eight cooperative centers and three cooperative centers in 2021, 2022 and 2023, respectively, due to expiration of the arrangements with certain of these cooperative centers as well as our focus on developing our hospital business going forward.
Selling expenses consist primarily of expenses associated with the development of new cancer hospitals and cooperative centers, such as salaries and benefits for our business development personnel, marketing expenses and travel related expenses. Our selling expenses include share-based compensation of RMB3.1 million in 2020, RMB2.1 million in 2021 and RMB0.5 million (US$0.1 million) in 2022. General and Administrative Expenses .
Selling expenses consist primarily of expenses associated with the development of new cancer hospitals and cooperative centers, such as salaries and benefits for our business development personnel, marketing expenses and travel related expenses. Our selling expenses include share-based compensation of RMB2.1 million in 2021, RMB0.5 million in 2022 and nil in 2023. General and Administrative Expenses .
The activities of US Proton Therapy Holdings Limited (Delaware) are located solely in the state of Texas, and as such, it is subject to Texas franchise tax. The amount of current U.S. federal and state income tax for US Proton Therapy Holdings Limited (Delaware) was RMB1.7 million, RMB0.4 million, RMB0.2 million (US$28,000) in 2020, 2021 and 2022, respectively.
The activities of US Proton Therapy Holdings Limited (Delaware) are located solely in the state of Texas, and as such, it is subject to Texas franchise tax. The amount of current U.S. federal and state income tax for US Proton Therapy Holdings Limited (Delaware) was RMB0.4 million, RMB0.2 million and RMB0.4 million (US$57,000) in 2021, 2022 and 2023, respectively.
Our gross loss of hospital business increased by 42.4%to RMB181.6 million (US$26.3 million) in 2022 from RMB127.5 million in 2021.
Our gross loss of hospital business increased by 42.4%to RMB181.6 million in 2022 from RMB127.5 million in 2021.
These forward-looking statements include, among other things, statements relating to: ● the risks, challenges and uncertainties in the oncology healthcare service industry and for our business generally; ● our current expansion strategy, including our ability to establish cancer hospitals and to expand our network of centers; ● our ability to maintain strong working relationships with our hospital partners; ● our expectations regarding patients’ and their referring doctors’ demand for and acceptance of the radiotherapy, diagnostic imaging and other oncology healthcare services; ● changes in the healthcare industry in China, including changes in the healthcare policies and regulations of the PRC government; ● technological or therapeutic changes affecting the field of cancer treatment and diagnostic imaging; ● our ability to comply with all relevant environmental, health and safety laws and regulations; ● our ability to obtain and maintain permits, licenses and registrations to carry on our business; ● our future prospects, business development, results of operations and financial condition; and ● fluctuations in general economic and business conditions in China. 105 Table of Contents The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report.
These forward-looking statements include, among other things, statements relating to: ● the risks, challenges and uncertainties in the oncology healthcare service industry and for our business generally; ● our current expansion strategy, including our ability to establish cancer hospitals and to expand our network of centers; ● our ability to maintain strong working relationships with our hospital partners; ● our expectations regarding patients’ and their referring doctors’ demand for and acceptance of the radiotherapy, diagnostic imaging and other oncology healthcare services; ● changes in the healthcare industry in China, including changes in the healthcare policies and regulations of the PRC government; ● technological or therapeutic changes affecting the field of cancer treatment and diagnostic imaging; ● our ability to comply with all relevant environmental, health and safety laws and regulations; ● our ability to obtain and maintain permits, licenses and registrations to carry on our business; ● our future prospects, business development, results of operations and financial condition; and ● fluctuations in general economic and business conditions in China.
You should read this annual report completely and with the understanding that our actual future results may be materially different from what we expect. ​
You should read this annual report completely and with the understanding that our actual future results may be materially different from what we expect. ​ 113 Table of Contents
We also typically receive a lower contracted percentage under such service-only agreements compared to the percentage we receive from cooperative centers managed under lease and management services arrangements. Accordingly, we do not intend to substantially increase the number of service-only agreements in the future. As of December 31, 2022, we did not operate cooperative centers under service-only agreements.
We also typically receive a lower contracted percentage under such service-only agreements compared to the percentage we receive from cooperative centers managed under lease and management services arrangements. Accordingly, we do not intend to substantially increase the number of service-only agreements in the future.
Additional factors affecting operating cash flow included (1) an increase in accrued expenses and other liabilities of RMB119.1 million (US$17.3 million), (2) an increase in accounts payable of RMB113.7 million (US$16.5 million) and (3) an increase in deferred revenue of RMB57.2 million (US$8.3 million), which were partially offset by (1) an increase in prepayments and other current assets of RMB130.2 million (US$18.9 million) and (2) an increase in inventories of RMB46.8 million (US$6.8 million).
Additional factors affecting operating cash flow included (1) an increase in accrued expenses and other liabilities of RMB119.1 million, (2) an increase in accounts payable of RMB113.7 million and (3) an increase in deferred revenue of RMB57.2 million, which were partially offset by (1) an increase in prepayments and other current assets of RMB130.2 million and (2) an increase in inventories of RMB46.8 million.
Impairment loss on long-lived assets of RMB8.5 million, nil and nil was recognized for the years ended December 31, 2020, 2021 and 2022, respectively. 102 Table of Contents Share-based Compensation Share-based awards and restricted shares granted to employees are accounted for under ASC 718, Compensation-Stock Compensation (“ASC 718”).
Impairment loss on long-lived assets of nil, nil and nil was recognized for the years ended December 31, 2021, 2022 and 2023, respectively. 110 Table of Contents Share-based Compensation Share-based awards and restricted shares granted to employees are accounted for under ASC 718, Compensation-Stock Compensation (“ASC 718”).
As a result of the foregoing, we had a gross loss of RMB152.4 million (US$22.1 million) in 2022, compared to a gross loss of RMB56.9 million in 2021. Our overall gross margin was negative 11.7% and negative 32.3% in 2021 and 2022, respectively. 86 Table of Contents Hospital Business .
As a result of the foregoing, we had a gross loss of RMB152.4 million in 2022, compared to a gross loss of RMB56.9 million in 2021. Our overall gross margin was negative 11.7% and negative 32.3% in 2021 and 2022, respectively. Hospital Business .
Our general and administrative expenses also include share-based compensation expenses of RMB17.6 million in 2020, RMB12.6 million in 2021 and negative RMB6.4 million (negative US$0.9 million) in 2022. See “—Share-based Compensation.” Impairment of Long-lived Assets . Our impairment of long-lived assets was primarily related to property, plant and equipment in connection with our business operations.
Our general and administrative expenses also include share-based compensation expenses of RMB12.6 million in 2021, negative RMB6.4 million in 2022 and nil in 2023. See “—Share-based Compensation.” Impairment of Long-lived Assets . Our impairment of long-lived assets was primarily related to property, plant and equipment in connection with our business operations.
Significant estimates and assumptions reflected in our financial statements include, but are not limited to, impairment of long-lived assets and goodwill, expected credit losses for accounts receivable and other receivables included in prepayments and other current assets, purchase price allocation, fair value measurement of retained noncontrolling interest after losing control of subsidiary, measurement of available-for-sale debt securities, unrecognized tax benefits, realization of deferred tax assets, share-based compensation expenses, incremental borrowing rate of right-of-use assets and related lease obligation, and fair value measurement of derivative liability.
Significant estimates and assumptions reflected in our financial statements include, but are not limited to, impairment of long-lived assets and goodwill, expected credit losses for accounts receivable and other receivables included in prepayments and other current assets, purchase price allocation, measurement of available-for-sale debt securities, unrecognized tax benefits, realization of deferred tax assets, incremental borrowing rate of right-of-use assets and related lease obligation, and fair value measurement of derivative liability.
As of December 31, 2022, we had an outstanding balance of RMB474.9 million (US$68.9 million). The loan will be due in July 2028. In November 2020, Guangzhou Hospital entered into a long-term loan agreement of RMB400.0 million with China Construction Bank that bears a floating interest rate. The loan is secured by land use rights.
The loan will be due in July 2028. In November 2020, Guangzhou Hospital entered into a long-term loan agreement of RMB400.0 million with China Construction Bank that bears a floating interest rate. The loan is secured by land use rights. As of December 31, 2023, we had an outstanding balance of RMB381.6 million (US$53.7 million).
As of December 31, 2022, we had purchase obligations for certain medical equipment that amounted to RMB221.0 million (US$32.0 million), which are all scheduled to be paid within one year. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information of the Company—B. Business Overview— Intellectual Property.” D.
As of December 31, 2023, we had purchase obligations for certain medical equipment that amounted to RMB271.9 million (US$38.3 million), which are all scheduled to be paid within one year. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information of the Company—B. Business Overview— Intellectual Property.” D.
In addition, a circular issued by the State Administration of Taxation regarding the standards used to classify certain Chinese-invested enterprises controlled by Chinese enterprises or Chinese group enterprises and established outside of China as “resident enterprises” clarified that dividends and other income paid by such “resident enterprises” will be considered to be PRC source income, subject to PRC withholding tax, currently at a rate of 10%, when recognized by non-PRC enterprise shareholders.
In addition, a circular issued by the State Administration of Taxation regarding the standards used to classify certain Chinese-invested enterprises controlled by Chinese enterprises or Chinese group enterprises and established outside of China as “resident enterprises” clarified that dividends and other income paid by such “resident enterprises” will be considered to be PRC source income, subject to PRC withholding tax, currently at a rate of 10%, when recognized by non-PRC enterprise shareholders. 91 Table of Contents This circular also subjects such “resident enterprises” to various reporting requirements with the PRC tax authorities.
In 2020, 2021 and 2022, net revenue derived from our top five hospital partners was approximately 22.7%, 17.1% and 15.9%, respectively, of our total net revenues. Our largest hospital partner accounted for 5.9%, 8.3% and 5.0% of our total net revenues during those periods, respectively.
In 2021, 2022 and 2023, net revenue derived from our top five hospital partners was approximately 17.1%, 15.9% and 6.0%, respectively, of our total net revenues. Our largest hospital partner accounted for 8.3%, 5.0% and 2.4% of our total net revenues during those periods, respectively.
General and administrative expenses consist primarily of salaries and benefits for our finance, human resources and administrative personnel, fees and expenses of legal, accounting and other professional services, insurance expenses, travel related expenses, depreciation of equipment and facilities used for administrative purposes, and other expenses.
General and administrative expenses consist primarily of salaries and benefits for our finance, human resources and administrative personnel, fees and expenses of legal, provisions for allowance for doubtful accounts of accounts receivable and other receivables, accounting and other professional services, insurance expenses, travel related expenses, depreciation of equipment and facilities used for administrative purposes, and other expenses.
As of December 31, 2021 and 2022, we recorded long-term investments of RMB390.6 million and RMB437.9 million (US$63.5 million), respectively. Goodwill Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business.
As of December 31, 2022 and 2023, we recorded long-term investments of RMB437.9 million and RMB394.7 million (US$55.6 million), respectively. Goodwill Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business.
The numbers of our treatment and diagnostic patient visits in our cooperative centers decreased from 8,729 and 88,266, respectively, in 2020, to 7,597 and 53,305, respectively, in 2021, and further to 4,523 and 20,980, respectively, in 2022, primarily due to the reduction of our cooperative centers and the suspension of operation of cooperative centers caused by the COVID-19 pandemic.
The numbers of our treatment and diagnostic patient visits in our cooperative centers decreased from 7,597 and 53,305 in 2021, respectively, to 4,523 and 20,980 in 2022, respectively, and further to 2,861 and 19,437 in 2023, respectively, primarily due to the reduction of our cooperative centers and the suspension of operation of cooperative centers caused by the COVID-19 pandemic.
Our general and administrative expenses included share-based compensation of RMB17.6 million, RMB12.6 million and negative RMB6.4 million (negative US$0.9 million) in 2020, 2021 and 2022, respectively. See “Item 6. Directors, Senior Management and Employee—B. Compensation—Compensation of Directors and Executive Officers—Share Incentive Plans” for details of the grants under our share incentive plans. ​ Cost of Revenues .
Our general and administrative expenses included share-based compensation of RMB12.6 million, negative RMB6.4 million and nil in 2021, 2022 and 2023, respectively. See “Item 6. Directors, Senior Management and Employee—B. Compensation—Compensation of Directors and Executive Officers—Share Incentive Plans” for details of the grants under our share incentive plans. ​ 89 Table of Contents Cost of Revenues .
We had loss on disposal of long-lived assets of RMB3,000 (US$400) in 2022 associated with the disposal of medical consumables by self-operated medical institutions, comapred to nil in 2021. Interest Income . Our interest income increased to RMB10.0 million (US$1.5 million) in 2022 from RMB5.9 million in 2021, primarily due to an increase in loan principal.
We had loss on disposal of long-lived assets of RMB3,000 in 2022 associated with the disposal of medical consumables by self-operated medical institutions, compared to nil in 2021. Interest Income . Our interest income increased to RMB10.0 million in 2022 from RMB5.9 million in 2021, primarily due to an increase in loan principal. Change in fair value of derivative liability.
The fair value of the gross assets acquired during the acquisition is not concentrated in a single identifiable asset or a group of similar identifiable assets and it meets the definition of a business and was accounted for as business acquisition under ASC 805.
Shanghai Imaging Center was under the control and consolidation of us before and after the transaction. The fair value of the gross assets acquired during the acquisition is not concentrated in a single identifiable asset or a group of similar identifiable assets and it meets the definition of a business and was accounted for as business acquisition under ASC 805.
As a result of the foregoing, our net loss increased to RMB522.7 million in 2021 from RMB404.0 million in 2020. 89 Table of Contents B.
As a result of the foregoing, our net loss increased to RMB769.0 million in 2022 from RMB522.7 million in 2021. 97 Table of Contents B.
Capital Expenditures In 2020, 2021 and 2022, our capital expenditures totaled RMB948.3 million, RMB914.6 million and RMB311.9 million (US$45.2 million), respectively. In past years, our capital expenditures related primarily to the purchase of medical equipment and the acquisition of assets from third parties.
Capital Expenditures In 2021, 2022 and 2023, our capital expenditures totaled RMB914.6 million, RMB311.9 million and RMB395.6 million (US$55.7 million), respectively. In past years, our capital expenditures related primarily to the purchase of medical equipment and the acquisition of assets from third parties.
Our short-term bank and other borrowings outstanding as of December 31, 2022 had a weighted average interest rate of 6.60% per annum.
Our short-term bank and other borrowings outstanding as of December 31, 2023 had a weighted average interest rate of 8.19% per annum.
Under the EIT Law and the implementation regulations, the PRC has adopted a uniform tax rate of 25% for all enterprises. Our PRC subsidiaries are subject to the tax rate of 25% since 2012.
China Our PRC subsidiaries are incorporated in the PRC and are governed by applicable PRC income tax laws and regulations. Under the EIT Law and the implementation regulations, the PRC has adopted a uniform tax rate of 25% for all enterprises. Our PRC subsidiaries are subject to the tax rate of 25% since 2012.
Net cash used in investing activities for the year ended December 31, 2021 was RMB566.0 million, consisting primarily of the acquisitions of and deposits for the purchases of property, plant and equipment of RMB 760.6 million, investment in equity method investees of RMB61.2 million, which were partially offset by proceeds from disposal of property, plant and equipment of RMB213.0 million, proceeds from principal portion of direct financing leases of RMB31.5 million and redemption of available-for-sale debt securities of RMB20.0 million.
Net cash used in investing activities for the year ended December 31, 2022 was RMB118.8 million, consisting primarily of acquisitions of property, plant and equipment of RMB223.0 million and deposits for the purchases of property, plant and equipment of RMB160.8 million, which were partially offset by proceeds from agreements cancellation with a cooperative hospital of RMB238.1 million and redemption of available-for-sale debt securities of RMB11.9 million. 101 Table of Contents Net cash used in investing activities for the year ended December 31, 2021 was RMB566.0 million, consisting primarily of the acquisitions of and deposits for the purchases of property, plant and equipment of RMB 760.6 million, investment in equity method investees of RMB61.2 million, which were partially offset by proceeds from disposal of property, plant and equipment of RMB213.0 million, proceeds from principal portion of direct financing leases of RMB31.5 million and redemption of available-for-sale debt securities of RMB20.0 million.
As of December 31, 2021 and 2022, the short-term bank and other borrowing bore a weighted average interest of 5.86% and 6.60% per annum, respectively, and the long-term bank and other borrowings bore a weighted average interest of 6.31% and 6.48% per annum, respectively.
As of December 31, 2022 and 2023, the short-term bank and other borrowing bore a weighted average interest of 6.60% and 8.19% per annum, respectively, and the long-term bank and other borrowings bore a weighted average interest of 6.48% and 7.42% per annum, respectively.
The Range and Mix of Services Provided in Our Cancer Hospitals and Cooperative Centers The medical service fees charged for the services provided in our cancer hospitals and cooperative centers vary by the type of medical equipment used as well as the provinces or regions in China in which such hospitals and centers are located due to the varying applicable price ceilings.
As of December 31, 2023, we did not operate cooperative centers under service-only agreements. 85 Table of Contents The Range and Mix of Services Provided in Our Cancer Hospitals and Cooperative Centers The medical service fees charged for the services provided in our cancer hospitals and cooperative centers vary by the type of medical equipment used as well as the provinces or regions in China in which such hospitals and centers are located due to the varying applicable price ceilings.
In 2020, we had other income, net of RMB6.3 million, loss on disposal of subsidiaries of RMB14.9 million and gain on disposal of an equity method investment of RMB7.8 million. In 2021, we had other expenses, net of RMB1.2 million. We did not have gain on disposal of subsidiaries and gain on disposal of an equity method investment in 2021.
Other Expenses, Net; Loss on Disposal of Subsidiaries; Gain on Disposal of an Equity Method Investment . In 2021, we had other expenses, net of RMB1.2 million. We did not have loss on disposal of subsidiaries and gain on disposal of an equity method investment in 2021.
We had net cash used in operating activities of RMB359.3 million and RMB216.7 million (US$31.4 million) in 2021 and 2022, respectively. These conditions raised substantial doubt about our ability to continue as a going concern.
We had net cash used in operating activities of RMB216.7 million and RMB276.5 million (US$38.9 million) in 2022 and 2023, respectively. These conditions raised substantial doubt about our ability to continue as a going concern.
The loan is secured by land use rights and construction in progress. As of December 31, 2022, we had an outstanding balance of RMB971.0 million (US$140.8 million).
The loan is secured by land use rights and construction in progress. As of December 31, 2023, we had an outstanding balance of RMB953.0 million (US$134.2million).
In addition, upon payment of dividends by these companies to their shareholders, no Hong Kong withholding tax will be imposed. 83 Table of Contents Singapore China Medstar is incorporated in Singapore and does not conduct any substantive operations of its own.
In addition, upon payment of dividends by these companies to their shareholders, no Hong Kong withholding tax will be imposed. Singapore China Medstar is incorporated in Singapore and does not conduct any substantive operations of its own, which was disposed in 2022 as a subsidiary of Guofu Huimei.
United States US Proton Therapy Holdings Limited (Delaware) is incorporated in the state of Delaware, United States in 2011. The entity is subject to U.S. federal and state income tax (a flat federal income tax rate of 21% in 2020, 2021 and 2022) on its taxable income under the current laws of the United States.
The entity is subject to U.S. federal and state income tax (a flat federal income tax rate of 21% in 2021, 2022 and 2023) on its taxable income under the current laws of the United States.
To date, we have financed our operations primarily through cash flows from operations and short-term and long-term bank borrowings. We had net current liabilities of RMB361.4 million (US$52.4 million) as of December 31, 2022.
To date, we have financed our operations primarily through cash flows from operations and short-term and long-term bank borrowings. We had net current liabilities of RMB1,334.2 million (US$188.0 million) as of December 31, 2023.
On May 29, 2015, our board of directors and the shareholders authorized the issuance of additional 4,940,550 ordinary shares under the 2008 share incentive plan. 82 Table of Contents On November 27, 2009 and September 30, 2011, we granted options to purchase a total of 4,765,800 ordinary shares at exercise prices of US$3.67 and US$2.17 per share, respectively, under our 2008 share incentive plan to our directors and employees.
On November 27, 2009 and September 30, 2011, we granted options to purchase a total of 4,765,800 ordinary shares at exercise prices of US$3.67 and US$2.17 per share, respectively, under our 2008 share incentive plan to our directors and employees.
The acquisition date was on January 4, 2021, when we actually obtained the shareholder rights of Healthingkon. On the same day, one of our subsidiaries entered into an acting-in-concert agreement with two other shareholders of Healthingkon, pursuant to which the two shareholders agreed to be coordinated actors on the matters related to shareholders’ rights of Healthingkon.
On the same day, one of our subsidiaries entered into an acting-in-concert agreement with two other shareholders of Healthingkon, pursuant to which the two shareholders agreed to be coordinated actors on the matters related to shareholders’ rights of Healthingkon. Pursuant to the agreement, we obtained majority control over Healthingkon.
In addition, certain medical services allow us to charge higher fees than other types of medical services. 78 Table of Contents For example, medical service fees for treatments provided through head gamma knife systems typically range from approximately RMB12,000 to RMB16,000 per patient case, with each treatment lasting one session for approximately 30 to 90 minutes, and medical service fees for treatments provided through linear accelerators typically range from approximately RMB5,000 to RMB60,000 per patient case, with each treatment lasting from 30 to 40 sessions and ten to 20 minutes each.
For example, medical service fees for treatments provided through head gamma knife systems typically range from approximately RMB12,000 to RMB16,000 per patient case, with each treatment lasting one session for approximately 30 to 90 minutes, and medical service fees for treatments provided through linear accelerators typically range from approximately RMB5,000 to RMB60,000 per patient case, with each treatment lasting from 30 to 40 sessions and ten to 20 minutes each.
In 2022, we had other expenses, net of RMB216.6 million (US$31.4 million) mainly in relation to the termination of the cooperation agreements for the Beijing Proton Medical Center project and loss on disposal of subsidiaries of RMB61.5 million (US$8.9 million) relating to the disposal of Guofu Huimei and its subsidiaries.
In 2022, we had other expenses, net of RMB216.6 million mainly in relation to the termination of the cooperation agreements for the Beijing Proton Medical Center project and loss on disposal of subsidiaries of RMB61.5 million relating to the disposal of Guofu Huimei and its subsidiaries. We did not have gain on disposal of an equity method investment in 2022.
In the past, we recorded uncollectible accounts receivable. Our allowance for doubtful accounts was RMB4.9 million and RMB7.8 million (US$1.1 million) as of December 31, 2021 and 2022, respectively. We have historically derived a large portion of our total net revenues from a limited number of our hospital partners.
In the past, we recorded uncollectible accounts receivable under our network business. Our allowance for doubtful accounts was RMB6.2 million and RMB29.6 million (US$4.2 million) as of December 31, 2022 and 2023, respectively. We have historically derived a large portion of our total net revenues from a limited number of our hospital partners.
This circular also subjects such “resident enterprises” to various reporting requirements with the PRC tax authorities. Under the implementation regulations to the EIT Law, an “effective management organizations” is defined as a body that has material and overall management and control over the manufacturing and operations, personnel and human resources, finances and properties of an enterprise.
Under the implementation regulations to the EIT Law, an “effective management organizations” is defined as a body that has material and overall management and control over the manufacturing and operations, personnel and human resources, finances and properties of an enterprise.
Change in fair value of derivative liability. Our change in fair value of derivative liability increased to RMB1.0 million (US$0.1 million) in 2022 from negative RMB39,000 in 2021, primarily due to the fluctuations in the fair value of the derivative liability. Income from Equity Method Investments .
Our change in fair value of derivative liability increased to RMB1.0 million in 2022 from negative RMB39,000 in 2021, primarily due to the fluctuations in the fair value of the derivative liability. Income from Equity Method Investments . Our income from equity method investments remained relatively stable at RMB18.2 million and RMB17.6 million in 2021 and 2022, respectively.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Such restricted shares are subject to a four-year vesting schedule with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, and will terminate no later than eight years from their grant date.
Such restricted shares are subject to a four-year vesting schedule with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, and will terminate no later than eight years from their grant date.
Such restricted shares are subject to a four-year vesting schedule with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, and will terminate no later than eight years from their grant date.
Such restricted shares are subject to a four-year vesting schedule with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, and will terminate no later than eight years from their grant date.
The compensation committee is responsible for, among other things: ● approving and overseeing the compensation package for our executive officers; ● reviewing and making recommendations to the board with respect to the compensation of our directors; ● reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives, and setting the compensation level of our chief executive officer based on such evaluation; and ● reviewing periodically and making recommendations to the board regarding any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. 110 Table of Contents Duties of Directors Under Cayman Islands law, our directors have a fiduciary duty to act honestly, in good faith and with a view to our best interests.
The compensation committee is responsible for, among other things: ● approving and overseeing the compensation package for our executive officers; ● reviewing and making recommendations to the board with respect to the compensation of our directors; ● reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives, and setting the compensation level of our chief executive officer based on such evaluation; and ● reviewing periodically and making recommendations to the board regarding any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. 118 Table of Contents Duties of Directors Under Cayman Islands law, our directors have a fiduciary duty to act honestly, in good faith and with a view to our best interests.
The following table summarizes, as of December 31, 2022, the outstanding options and restricted shares granted to our directors and executive officers and other individuals as a group. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercise ​ ​ ​ ​ ​ Ordinary ​ Price ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ Underlying ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ Outstanding ​ ​ ​ ​ ​ ​ ​ ​ Outstanding ​ Options ​ Restricted ​ ​ ​ ​ Name ​ Options ​ (US$/Share) ​ Shares ​ Grant Date ​ Expiration Date Jianyu Yang — — — ​ — ​ — Zheng Cheng — — — ​ — ​ — Yue Yu — — — ​ — ​ — Boxun Zhang ​ — ​ — ​ — ​ — ​ — Wayne Yu ​ — ​ — ​ — ​ — ​ — Liping Zhang ​ — ​ — ​ 45,000 ​ September 13, 2017 ​ N/A ​ ​ — ​ — ​ 90,000 ​ October 2, 2018 ​ N/A Hongzhong Liu ​ — ​ — ​ — ​ — ​ — Other individuals as group — — 973,284 ​ February 18, 2014 ​ N/A ​ — — 21,132 ​ July 1, 2014 ​ N/A ​ ​ — ​ — ​ 69,564 ​ August 1, 2014 ​ N/A ​ — — 1,219,425 ​ August 7, 2017 ​ N/A ​ ​ — ​ — ​ 2,935,500 ​ August 8, 2017 ​ N/A ​ — — 5,611,605 ​ October 2, 2018 ​ N/A ​ C.
The following table summarizes, as of December 31, 2023, the outstanding options and restricted shares granted to our directors and executive officers and other individuals as a group. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercise ​ ​ ​ ​ ​ Ordinary ​ Price ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ Underlying ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ Outstanding ​ ​ ​ ​ ​ ​ ​ ​ Outstanding ​ Options ​ Restricted ​ ​ ​ ​ Name ​ Options ​ (US$/Share) ​ Shares ​ Grant Date ​ Expiration Date Jianyu Yang — — — ​ — ​ — Zheng Cheng — — — ​ — ​ — Yue Yu — — — ​ — ​ — Boxun Zhang ​ — ​ — ​ — ​ — ​ — Wayne Yu ​ — ​ — ​ — ​ — ​ — Liping Zhang ​ — ​ — ​ 45,000 ​ September 13, 2017 ​ N/A ​ ​ — ​ — ​ 90,000 ​ October 2, 2018 ​ N/A Hongzhong Liu ​ — ​ — ​ — ​ — ​ — Other individuals as group — — 973,284 ​ February 18, 2014 ​ N/A ​ — — 21,132 ​ July 1, 2014 ​ N/A ​ ​ — ​ — ​ 69,564 ​ August 1, 2014 ​ N/A ​ — — 1,219,425 ​ August 7, 2017 ​ N/A ​ ​ — ​ — ​ 2,935,500 ​ August 8, 2017 ​ N/A ​ — — 5,611,605 ​ October 2, 2018 ​ N/A ​ C.
On November 27, 2009 and September 30, 2011, we granted options to purchase 4,765,800 ordinary shares at an exercise price of US$3.67 and US$2.17 per share, respectively, of which options to purchase an aggregate of 1,716,500 ordinary shares were granted to our executive officers and directors and the remainder to other employees. 108 Table of Contents On February 18, 2014, we granted options to purchase 3,479,604 ordinary shares at an exercise price of US$2.037, of which options to purchase an aggregate of 2,439,126 ordinary shares were granted to our executive officers and directors and the remainder to other employees.
On November 27, 2009 and September 30, 2011, we granted options to purchase 4,765,800 ordinary shares at an exercise price of US$3.67 and US$2.17 per share, respectively, of which options to purchase an aggregate of 1,716,500 ordinary shares were granted to our executive officers and directors and the remainder to other employees. 116 Table of Contents On February 18, 2014, we granted options to purchase 3,479,604 ordinary shares at an exercise price of US$2.037, of which options to purchase an aggregate of 2,439,126 ordinary shares were granted to our executive officers and directors and the remainder to other employees.
Haifeng Liu, sold all of his vested options to purchase 14,829,200 ordinary shares of our company to three former directors of China Medstar who are now our directors and executive officers as employment incentive for such directors. 107 Table of Contents The three executive directors subsequently exercised the vested options with total proceeds from such exercise received by us amounting to approximately US$11.7 million.
Haifeng Liu, sold all of his vested options to purchase 14,829,200 ordinary shares of our company to three former directors of China Medstar who are now our directors and executive officers as employment incentive for such directors. 115 Table of Contents The three executive directors subsequently exercised the vested options with total proceeds from such exercise received by us amounting to approximately US$11.7 million.
Board Practices—Employment Agreements.” 112 Table of Contents We are required under the local laws and regulations to make contributions to our employee benefit plans based on specified percentages of the salaries, bonuses, housing allowances and certain other allowances of our employees, up to a maximum amount specified by the respective local government authorities.
Board Practices—Employment Agreements.” 120 Table of Contents We are required under the local laws and regulations to make contributions to our employee benefit plans based on specified percentages of the salaries, bonuses, housing allowances and certain other allowances of our employees, up to a maximum amount specified by the respective local government authorities.
For share-based compensation, see “—Share Incentive Plans.” We did not have any amount accrued in 2022 for pension, retirement or other similar benefits to our directors and our executive officers, except as disclosed in “—D. Employees” and elsewhere in this annual report on Form 20-F.
For share-based compensation, see “—Share Incentive Plans.” We did not have any amount accrued in 2023 for pension, retirement or other similar benefits to our directors and our executive officers, except as disclosed in “—D. Employees” and elsewhere in this annual report on Form 20-F.
Our executive officer may typically terminate his or her employment at any time if we fail to provide labor protection or work conditions as stipulated in the employment agreement. 111 Table of Contents The executive officers may also terminate the employment agreement at any time without cause upon a 30-day notice.
Our executive officer may typically terminate his or her employment at any time if we fail to provide labor protection or work conditions as stipulated in the employment agreement. 119 Table of Contents The executive officers may also terminate the employment agreement at any time without cause upon a 30-day notice.
Prior to joining Trinity Western University, she was a teaching assistant in the Department of Economics at University of Ottawa from 1999 to 2004. Dr. Zhang received a doctorate degree in economics from University of Ottawa in 2005. Mr. Hongzhong Liu has served as an independent director of our company since September 2022. Mr.
Prior to joining Trinity Western University, she was a teaching assistant in the Department of Economics at University of Ottawa from 1999 to 2004. Dr. Zhang received a doctorate degree in economics from University of Ottawa in 2005. 114 Table of Contents Mr. Hongzhong Liu has served as an independent director of our company since September 2022. Mr.
Each committee’s members and functions are described below. 109 Table of Contents Audit Committee Our audit committee consists of Mr. Wayne Yu, Dr. Liping Zhang and Mr. Hongzhong Liu. Mr. Wayne Yu is the chairman of our audit committee. Mr. Wayne Yu and Dr.
Each committee’s members and functions are described below. 117 Table of Contents Audit Committee Our audit committee consists of Mr. Wayne Yu, Dr. Liping Zhang and Mr. Hongzhong Liu. Mr. Wayne Yu is the chairman of our audit committee. Mr. Wayne Yu and Dr.
He received his Ph.D. in finance from University of Alberta in November 1997. 106 Table of Contents Dr. Liping Zhang has served as an independent director of our company since September 2017. She joined Trinity Western University as assistant professor in 2005 and has served as associate professor in Trinity Western University since 2014.
He received his Ph.D. in finance from University of Alberta in November 1997. Dr. Liping Zhang has served as an independent director of our company since September 2017. She joined Trinity Western University as assistant professor in 2005 and has served as associate professor in Trinity Western University since 2014.
(5) Represents 7,500,000 Class B ordinary shares, each convertible into one Class A ordinary share, held by Bluestone Holdings Limited, a limited liability company organized under the laws of the British Virgin Islands, of which Mr.
(5) Represents 7,500,000 Class B ordinary shares, each convertible into one Class A ordinary share, held by Bluestone Holdings Limited, a limited liability company organized under the laws of the British Virgin Islands, of which Mr. Cheng is a sole director and sole shareholder.
Share Ownership ​ The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the date of this annual report by: ​ ● each of our directors and executive officers; and ● each person known to us to own beneficially 5.0% or more of our ordinary shares. 113 Table of Contents The calculations in the table below are based on 130,251,685 ordinary shares outstanding, including 84,463,737 Class A ordinary shares (excluding treasury shares issued and reserved for future issuance upon the exercising or vesting of awards granted under our share incentive plans) and 45,787,948 Class B ordinary shares outstanding, as of the date of this annual report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned (1) ​ ​ ​ ​ ​ % of ​ ​ Class A ​ Class B ​ Total ​ % of ​ Aggregate ​ ​ Ordinary ​ Ordinary ​ Ordinary ​ Beneficial ​ Voting ​ ​ Shares ​ Shares ​ Shares ​ Ownership (2) Power (3) Directors and Executive Officers: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Jianyu Yang (4) 13,982,928 38,287,948 52,270,876 40.1 73.2 Zheng Cheng (5) — 7,500,000 7,500,000 5.8 13.8 Yue Yu — — — — — Boxun Zhang — — — — — Wayne Yu — — — — — Liping Zhang * — * * * Hongzhong Liu — — — — — All directors and officers as a group 14,117,928 45,787,948 59,905,876 45.9 87.0 Principal Shareholders: ​ ​ ​ ​ ​ Morgancreek Investment Holdings Limited (6) 13,982,928 38,287,948 52,270,876 40.1 73.2 Solar Honor Limited (7) 15,379,303 — 15,379,303 11.8 2.8 Oasis Inspire Limited (8) 13,086,350 — 13,086,350 10.0 2.4 Bluestone Holdings Limited (9) — 7,500,000 7,500,000 5.8 13.8 * Less than 1.0%.
The calculations in the table below are based on 130,251,685 ordinary shares outstanding, including 84,463,737 Class A ordinary shares (excluding treasury shares issued and reserved for future issuance upon the exercising or vesting of awards granted under our share incentive plans) and 45,787,948 Class B ordinary shares outstanding, as of the date of this annual report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned (1) ​ ​ ​ ​ ​ % of ​ ​ Class A ​ Class B ​ Total ​ % of ​ Aggregate ​ ​ Ordinary ​ Ordinary ​ Ordinary ​ Beneficial ​ Voting ​ ​ Shares ​ Shares ​ Shares ​ Ownership (2) Power (3) Directors and Executive Officers: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Jianyu Yang (4) 13,982,928 38,287,948 52,270,876 40.1 73.2 Zheng Cheng (5) — 7,500,000 7,500,000 5.8 13.8 Yue Yu — — — — — Boxun Zhang — — — — — Wayne Yu — — — — — Liping Zhang * — * * * Hongzhong Liu — — — — — All directors and officers as a group 14,117,928 45,787,948 59,905,876 46.0 87.0 Principal Shareholders: ​ ​ ​ ​ ​ Morgancreek Investment Holdings Limited (6) 13,982,928 38,287,948 52,270,876 40.1 73.2 Solar Honor Limited (7) 15,379,303 — 15,379,303 11.8 2.8 Oasis Inspire Limited (8) 13,086,350 — 13,086,350 10.0 2.4 Bluestone Holdings Limited (9) — 7,500,000 7,500,000 5.8 13.8 * Less than 1.0%. 121 Table of Contents (1) Beneficial ownership is determined in accordance with Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
Cheng is a sole director and sole shareholder. 114 Table of Contents (6) Represents 38,287,948 Class B ordinary shares, each convertible into one Class A ordinary share, and 4,660,976 ADSs, each representing three Class A ordinary shares, held by Morgancreek, a limited liability company organized under the laws of the British Virgin Islands.
(6) Represents 38,287,948 Class B ordinary shares, each convertible into one Class A ordinary share, and 4,660,976 ADSs, each representing three Class A ordinary shares, held by Morgancreek, a limited liability company organized under the laws of the British Virgin Islands.
Name* Age Position/ Title Jianyu Yang 52 Chairman, chief executive officer Zheng Cheng 60 Director Yue Yu 39 Director Boxun Zhang 47 Chief financial officer Wayne Yu ​ 60 ​ Independent director Liping Zhang ​ 51 ​ Independent director Hongzhong Liu 52 Independent director ​ Dr.
Name* Age Position/ Title Jianyu Yang 53 Chairman, chief executive officer Zheng Cheng 61 Director Yue Yu 40 Director Boxun Zhang 48 Chief financial officer Wayne Yu ​ 61 ​ Independent director Liping Zhang ​ 52 ​ Independent director Hongzhong Liu 53 Independent director ​ Dr.
The following table set forth certain information about our employees by function as of the period indicated: ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2022 ​ Employees % of Total Management 13 1.4 Administration 227 24.7 Financial control 45 4.9 Hospital and Operation 517 56.3 Marketing 23 2.5 Business development 38 4.2 Centers 55 6.0 Total 918 100.0 ​ We have entered into employment agreements with each of our employees.
The following table set forth certain information about our employees by function as of the period indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ Employees % of Total Management 13 1.8 % Administration 229 31.5 % Financial control 31 4.2 % Hospital and Operation 372 51.2 % Marketing 26 3.6 % Business development 21 2.9 % Centers 35 4.8 % Total 727 100.0 ​ ​ We have entered into employment agreements with each of our employees.
Compensation Compensation of Directors and Executive Officers In 2022, the aggregate cash compensation to all of our directors and our executive officers was RMB 2.2million (US$0.3 million).
Compensation Compensation of Directors and Executive Officers In 2023, the aggregate cash compensation to all of our directors and our executive officers was RMB2.9 million (US$0.4 million).
As of the date of this annual report, a total of 16,504,543 ADSs representing 49,513,629 Class A ordinary shares (excluding treasury shares issued and reserved for future issuance upon the exercising or vesting of awards granted under our share incentive plans) were outstanding.
The address of the principal office of Bluestone Holdings Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, British Virgin Islands. 122 Table of Contents As of the date of this annual report, a total of 16,504,543 ADSs representing 49,513,629 Class A ordinary shares (excluding treasury shares issued and reserved for future issuance upon the exercising or vesting of awards granted under our share incentive plans) were outstanding.
As of December 31, 2022, all of our employees were based in China.
We had 972, 918 and 727 employees as of December 31, 2021, 2022 and 2023, respectively. As of December 31, 2023, all of our employees were based in China.
The total amount of the contributions that we made to employee benefit plans in 2020, 2021 and 2022 was RMB28.2 million, RMB51.1 million and RMB58.6 million (US$8.5 million), respectively.
The total amount of the contributions that we made to employee benefit plans in 2021, 2022 and 2023 was RMB51.1 million, RMB58.6 million and 57.6 million (US$8.1 million), respectively. Our success depends to a significant extent upon, among other factors, our ability to attract, retain and motivate qualified personnel.
The address of our directors and executive officers is Concord Medical Services Holdings Limited, Room 2701-05, Tower A, Global Trade Center, 36 North Third Ring Road East, Dongcheng District, Beijing, People’s Republic of China, 100013.
The address of our directors and executive officers is Concord Medical Services Holdings Limited, Room A1-A5 26/F, East Zone, Hanwei Plaza, No. 7 Guanghua Road, Chaoyang District, Beijing, People’s Republic of China 100020.
Removed
In November 2020, we entered into a definitive agreement to sell 90% equity interest in Concord Healthcare Singapore Pte Ltd, which operated and owned our hospital in Singapore, and ceased control over the management of such hospital. We had 851,972 and 918 employees as of December 31, 2020, 2021 and 2022, respectively.
Added
Share Ownership ​ The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the date of this annual report by: ​ ● each of our directors and executive officers; and ● each person known to us to own beneficially 5.0% or more of our ordinary shares.
Removed
Of the total amount of contributions that we made to employee benefit plans in 2020, 2021 and 2022, RMB0.1 million, nil and nil were attributable to Concord International Hospital in Singapore that we acquired in 2015, respectively.
Removed
In November 2020, we entered into a definitive agreement to sell 90% equity interest in Concord Healthcare Singapore Pte Ltd, which operated and owned our hospital in Singapore, and ceased control over the management of such hospital. Our success depends to a significant extent upon, among other factors, our ability to attract, retain and motivate qualified personnel.
Removed
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
Removed
The address of the principal office of Bluestone Holdings Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, British Virgin Islands.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

9 edited+5 added−0 removed3 unchanged
This agreement has been terminated and replaced by the following loan due to the fair value appreciation of equipment secured. In May 2022, Shanghai Medstar entered into a further failed sales-leaseback agreement of RMB160.0 million (US$23.2 million) with Zhejiang Marine. The loan bears an interest rate of 7% per annum and is secured by equipment.
This agreement has been terminated and replaced by the following loan due to the fair value appreciation of equipment secured. In May 2022, Shanghai Medstar entered into a further failed sales-leaseback agreement of RMB160.0 million with Zhejiang Marine. The loan bears an interest rate of 7% per annum and is secured by equipment.
In July 2021, we entered into a loan agreement with Guangdong Proton International Hospital Management Co., Ltd, a wholly owned subsidiary of an equity investee of our group, to provide loan for such entity of RMB142.9 million. In 2022, we entered into another loan agreement with such entity to provide loan of RMB16.8 milion (US$2.4 million).
In July 2021, we entered into a loan agreement with Guangdong Proton International Hospital Management Co., Ltd, a wholly owned subsidiary of an equity investee of our group, to provide loan for such entity of RMB142.9 million. In 2022, we entered into another loan agreement with such entity to provide loan of RMB16.8 milion.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders ​ See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” ​ 115 Table of Contents B. Related Party Transactions ​ Borrowings with Related Parties Since December 2018, we entered into several loan agreements with Zhejiang Marine.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders ​ See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” ​ B. Related Party Transactions ​ Borrowings with Related Parties Since December 2018, we entered into several loan agreements with Zhejiang Marine.
History and Development of the Company,” and “Item 4. Information on the Company—C. Organizational Structure.” Share Incentives For a discussion of the share option plan adopted in 2007 by OMS, our predecessor, and our 2008 share incentive plan, see “Item 6. Directors, Senior Management and Employees—B. Compensation—Compensation of Directors and Executive Officers—Share Incentive Plans.” Indemnification Agreements See “Item 6.
Organizational Structure.” Share Incentives For a discussion of the share option plan adopted in 2007 by OMS, our predecessor, and our 2008 share incentive plan, see “Item 6. Directors, Senior Management and Employees—B. Compensation—Compensation of Directors and Executive Officers—Share Incentive Plans.” Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—C. Board Practices— Indemnification Agreements.” Employment Agreements See “Item 6.
The loan will be due in May 2027. The ending balance due to Zhejiang Marine as of December 31, 2022 totaled RMB246.4 million (US$35.7 million). In 2020, 2021 and 2022, we repaid RMB272.6 million, RMB77.1 million and RMB82.9 million (US$12.0 million), respectively, and incurred interest expense of RMB41.3 million, RMB13.0 million and RMB15.5 million (US$2.2 million), respectively.
The loan will be due in May 2027. The ending balance due to Zhejiang Marine as of December 31, 2023 totaled RMB232.4 million (US$32.7 million). In 2021, 2022 and 2023, we repaid RMB77.1 million, RMB82.9 million and RMB32.1 million (US$4.5 million), respectively, and incurred interest expense of RMB13.0 million, RMB15.5 million and RMB13.7 million (US$1.9 million), respectively.
Directors, Senior Management and Employees—C. Board Practices— Indemnification Agreements.” Employment Agreements See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Employment Agreements.” C. Interests of Experts and Counsel ​ Not applicable. ​ 116 Table of Contents
Directors, Senior Management and Employees—C. Board Practices—Employment Agreements.” C. Interests of Experts and Counsel ​ Not applicable. ​
The ending balance as of December 31, 2022 was RMB169.5 million (US$24.6 million). In 2020, 2021 and 2022, we recorded interest income from such entity of nil, RMB2.8 million and RMB7.0 million (US$1.0 million), respectively. In November 2021, we entered a loan agreement with Cherrylane Investments Limited, an entity controlled by Ms. Bi Zhang, the spouse of Dr.
In 2021, 2022 and 2023, we recorded interest income from such entity of RMB2.8 million, RMB7.0 million and RMB7.0 million (US$1.0 million), respectively. 123 Table of Contents In November 2021, we entered into a loan agreement with Cherrylane Investments Limited, an entity controlled by Ms. Bi Zhang, the spouse of Dr. Jianyu Yang, to obtain a loan of RMB12.1 million.
Jianyu Yang, to obtain a loan of RMB12.1 million. In December 2021, we entered a second loan agreement with Cherrylane Investments Limited to obtain a further loan of RMB9.2 million. The ending balance as of December 31, 2022 was RMB23.1 million (US$3.4 million). Reorganization and Private Placement See “Item 4. Information on the Company—A.
In December 2021, we entered into a second loan agreement with Cherrylane Investments Limited to obtain a further loan of RMB9.2 million. The ending balance as of December 31, 2023 was RMB4.1 million (US$0.6 million). In 2023, we repaid RMB19.7 million (US$2.8 million), and incurred interest expense of RMB0.4 million (US$0.1 million).
In January and March 2022, Aohua Technology entered into another failed sales-leaseback agreement of RMB10.0 million (US$1.4 million) and long-term loan agreement of RMB13.0 million (US$1.9 million), respectively, with Zhejiang Marine. Both of the loans bear an interest rate of 7.0% per annum and is secured by equipment. The loan will be due in January and March 2027, respectively.
In January 2023, Aohua Technology once again signed a failed sales-leaseback agreement with Zhejiang Marine Leasing, this time for a long-term loan of RMB4.4 million (US$0.6 million). The loan carries an annual interest rate of 6.6% and is also secured by equipment. This new loan will be due in January 2026.
Added
In January and March 2022, Aohua Technology reached agreements with Zhejiang Marine, including a failed sales-leaseback agreement of RMB10.0 million and a failed sales-leaseback agreement of RMB13.0 million. Continuing their collaboration, in May 2022, Aohua Technology further signed a failed sales-leaseback agreement, equivalent to a long-term loan of RMB26.0 million (US$3.7 million).
Added
All these loans have been arranged at an annual interest rate of 7.0% and are secured by equipment as collateral. Respectively, these loans are due for repayment in January 2027, March 2027, and May 2027.
Added
The gross ending balance of loan receivables as of December 31, 2023 was RMB176.5 million (US$23.9 million).
Added
In September 2023 and November 2023, we entered two loan agreements with Morgancreek, an entity controlled by Dr. Jianyu Yang, to obtain a total loan of RMB17.7 million (US$2.5 million). The loans bear an interest rate of 5.5% per annum, and the loan will be due in September 2024 and November 2024, respectively.
Added
The ending balance as of December 31, 2023 was RMB7.8 million (US$1.1 million). In 2023, we repaid RMB9.9 million (US$1.4 million), and incurred interest expense of RMB0.2 million (US$28,000). Reorganization and Private Placement See “Item 4. Information on the Company—A. History and Development of the Company,” and “Item 4. Information on the Company—C.

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